PE firms lose out on Vion sale

Unquote" reported in July that a number of GPs, including Advent International, CVC, Apax, BC Partners, Bain Capital, KKR, Blackstone and Cinven, were believed to be expressing interest in acquiring the subsidiary.

Vion announced its decision to find a co-shareholder for its ingredients division in April, in a bid to make the subsidiary independent from the group's food business.

It was reported in July that a number of banks were putting together a debt package worth €700m-1bn for the buyout. Darling has stated that it plans to finance the transaction through a combination of equity and both bank and public debt. JP Morgan Securities, Goldman Sachs and BMO Capital Markets provided committed financing for the deal.

NYSE-listed Darling is headquartered in Irving, Texas and employs approximately 3,400 staff throughout the US. The company recycles beef, poultry and pork by-products into ingredients including meat and bone meal, feed-grade fats and tallow, as well as converting used cooking oil and commercial bakery residue into feed and fuel ingredients.

For the acquisition of Vion Ingredients, Darling was advised by JP Morgan Securities while K&L Gates and Clifford Chance provided legal advice. The transaction is expected to be finalised in January next year.

The sale of Vion Ingredients will allow Vion to proceed with the intended spinout of its food division. Rather than sell Vion Foods, the group plans on making the division independent with its own funding. Vion intends to push ahead with the spinout through financing from several specialist banks, and long-term agreements are expected to be finalised soon, according to the company. The foods division employs 12,650 staff.

The Vion group, which is owned by agricultural association Zuidelijke Land-en Tuinbouworganisatie, is headquartered in Eindhoven with approximately 26,400 staff. Its turnover for 2011 was €9.5bn, with an EBITDA of €90.1m.

According to Vion, the sale of its ingredients division has normalised the group's debt position and strengthened its equity – it stated that it has recovered up to €400m in equity. Vion saw an equity loss of €100m in 2012 as well as a net loss of €830m, as opposed to a net gain of €14m in 2011.

Vion's UK-based pork division was bought by turnaround firm Endless in December last year.

Vion's ingredients division was founded in 1930 and is headquartered in Son en Breugel. The subsidiary employs 5,700 staff and generated revenues of €1.6bn in 2012, as well as an EBITDA of €200m. For the 12 months ending in June this year, the division recorded €1.7bn in revenues with an EBITDA of €210m.

Dirk Kloosterboer is the CEO of Vion Ingredients, which produces ingredients from slaughterhouse by-products, such as fats, gelatine and proteins. The end-products are supplied to the pharmaceutical, cosmetic, food, animal feed, energy and technology industries.

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