
Deal in focus: IK tucks into Meyers and Løgismose

IK Investment Partners has tapped into the high-end food and beverage market with its merger-buyout of Danish food businesses Meyers and Løgismose. Mikkel Stern-Peltz looks back on the deal
Danish high-end food and beverage businesses Meyers and Løgismose have been bought by IK Investment Partners in a DKK 700m deal, which will see the two companies merged.
While it comes as part of IK's investment, a merger had been on the cards before the buyout house was in the picture. The companies' family owners have known each other for years and had frequently spoken about cooperating on a joint line of retail food products.
A deal was eventually facilitated through a personal contact: Meyers founder and entrepreneur Claus Meyer had been classmates with IK partner Mads Ryum Larsen at Copenhagen Business School, according to another IK partner, Thomas Klitbo.
"It makes really good sense to combine the two," Klitbo says, noting that their brands will not be merged, but rather their companies' complementary departments and know-how will be combined.
"Løgismose has been very good at building production and sourcing supply-chain abilities, and is slightly more adept on food staples and B2B business, while Meyers is ahead on food service," says Klitbo. "There are clear advantages for these companies to make use of each other's organisations and learn from each other.
"Fundamentally, what both firms do really well is make high-quality food products."
Recipe for growth
The two family firms have a long-standing history at the forefront of Denmark's culinary culture. Løgismose's founders, the Grønlykke family, were behind the first restaurant to bring a Michelin star to the country.
Claus Meyer's eponymous empire has spanned cookbooks, TV shows and lectures, while he led the advent of New Nordic Cuisine as co-founder and co-owner of world-famous restaurant Noma in Copenhagen.
In recent years the two have been servicing the high-end food industry, with Løgismose producing and distributing dairy and food products, wine and chocolate, while Meyers has offered food products, cafeteria and consulting services, and operated a number of takeaway restaurants in Copenhagen.
Klitbo says leverage for the deal contitutes less than 30%, with some financing provided by SEB, and no shareholder loans: "For us, this is a case that's about growth – not financial engineering – so we have a very conservative capital structure with plenty of room to grow the business, be it with debt or equity."
Dansk Vækstkapital, an LP in IK's funds, will also invest directly in the new company.
Food for thought
IK sees the market for high-end food products as very exciting, with many of the same drivers as consumer staples, but supported by strong macro trends such as trace of origin and increased focus on the value chain of food production.
"One fact we find really interesting is that they have built up this presence, growth and knowhow without actually spending money on traditional marketing," says Klitbo. "They've simply achieved it by making a difference in what they do, the products they make and experiences they provide, and gaining a strong market position by doing so."
Though Meyers will launch and operate a Nordic brasserie and food hall in New York's Grand Central station in 2016, both companies currently operate mainly in Denmark.
Meyers in particular is predominately focused on the country's capital, and Klitbo says the main growth market in the near term will be Denmark, where he sees robust opportunities: "I think it is definitely interesting to look at internationalisation, and maybe also new acquisitions for the company, but first we want to get started, and realise some of the growth potential already here."
Danish delights
IK is not the first to see opportunities in the Danish high-end food segment, as its deal completes a trio of investments in the market in the last 18 months.
Adding Meyers and Løgismose to Maj Invest's backing of sushi restaurant chain Sticks'n'Sushi, Valedo Partners' acquisition of juice bar Joe & The Juice, and FSN Capital's 2008 investment in bakery chain Lagkagehuset, a clear trend emerges of up-market Danish food and beverage businesses being targeted.
The rest of the Nordic region has seen no similar investments, suggesting investors find the Danish market particularly attractive.
"In the past five years the industry has shown it is possible to build a large business from nothing," despite being a low-margin sector, says Jesper Marcussen, owner and founder of Copenhagen-based restaurant group Gloube.
He says the sector has seen a substantial increase in quality in recent years in response to customers' increasing demand for high-quality food and culinary experiences, which has resulted in Copenhagen becoming a proving ground for the industry.
"If a concept works in Copenhagen, it will work in many other places, because Danes are just more critical," Marcussen says, adding that the demand for quality means you are forced to improve and deliver a better product. "That demand for quality may be what makes Danish concepts so sharp that they become interesting to investors."
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