It said it is paying Maatman a price for the assets/liabilities transaction based on an enterprise value of €7m, or seven times the company’s EBITDA.
ForFarmers reported that, in 2017, Maatman sold 114,000 tons of feed and fertilizer to poultry and ruminant farmers. Its production of feed is outsourced to multiple parties; ForFarmers was responsible for 60% of that third party production volume.
The acquisition is subject to review by the German competition authorities.
“Maatman sells its feed mainly in the Netherlands, but also sells feed in Germany, which is over the threshold for the competition authorities,” explained Caroline Vogelzang, director of investor relations and corporate communications at ForFarmers when asked about the need for German regulatory approval.
Rationale for buy-out
She told FeedNavigator that ForFarmers was happy with the deal for a number of reasons:
“We strengthen our position in the poultry sector in the Netherlands and we are taking over a customer portfolio and a proficient sales team, with specific knowledge.”
The deal also includes a logistics component – ForFarmers will get 15 bulk tankers. She said this aspect is also hugely beneficially as it enables the compound feed giant to “further optimize” its transport activities.
Maatman was founded in 1929, initially as trading company in animal feed. It has 16 employees, including the current two managers who are also owners of the company.
One of the owners, Edie Maatman, will take on a steering role temporarily to “supervise a smooth integration of Maatman into ForFarmers and to ensure that the interests of customers and employees are well looked after in this transition phase.”
This deal follows the acquisition only last month by ForFarmers of Belgian feed company, Voeders Algoet, for around €14m. Meanwhile, in February this year, it took a 60% stake in Polish poultry feed company, Tasomix. In July 2016, it bought out VleutenSteijnVoeder, a Dutch swine feed producer.
War chest
When asked how ForFarmers is able to maintain such a pace of asset building, Vogelzang said that is mainly due to a combination of the company focusing on being cost efficient and it taking a prudent approach to investments. Despite the fact that the company spent some €60m on a share buyback scheme, at the end of 2017, it reported a positive cash position of €67m on its balance sheet.
The company has access to its funding facility, a banking arrangement, and can leverage this facility to gain access to a war chest of an additional €200m, she added.
“We have continued to generate cash since the end of last year, so we have enough funds for acquisitions, and they are a fundamental part of the company’s strategy."