February 1, 2016

 

Marel closes acquisition of MPS

 

   

Marel has announced the completed acquisition of MPS meat processing systems (MPS) on January 29.

 

On November 21, 2015, Marel announced that the company had entered into an agreement to acquire MPS meat processing systems. The purchase price is EUR382 million (US$414.6 million) on a debt and cash-free basis.

 

As previously announced on November 21 last year, Marel entered into an approximately EUR670 million (US$727 million) all-senior long term financing agreement at favorable terms in line with current market conditions.

 

The all-senior loan facilities, which have replaced the prior senior / junior structure, include a EUR343 million (US$372 million) term loan, a US$105 million term loan as well as a EUR225 million (US$244.2 million) revolving credit facility.

 

The loans mature in November 2020. Current interest terms are EURIBOR/LIBOR plus a margin of 275 basis points which will vary in line with Marel’s leverage ratio (Net debt / EBITDA) at the end of each quarter.

 

ABN Amro, ING and Rabobank acted as Book-runner Mandated Lead Arrangers.

 

This financing provides Marel with strategic and operational flexibility to support growth and value creation going forward. The financial position of Marel remains strong and the leverage ratio is estimated to be in line with the targeted capital structure of the company.

 

In relation to the closing of the acquisition, existing MPS shareholders, including MPS management, invest approximately EUR16 million (US$17.4 million) of their proceeds in Marel shares with a lock-up period of 18 months from the date of closing. The number of shares they acquire is 10.8 million for the price of 213 ISK per share or equivalent to EUR1.51 (US$1.64) per share.

 

With the acquisition, the two companies will be at the forefront in developing full-line solutions and equipment for the meat processing industry.

 

MPS is a leader in primary processing solutions for the pork and beef industry as well as in innovative solutions for water treatment and food logistics.

 

The company has shown solid growth and profitability in recent periods. Based on preliminary figures, MPS’ revenues and EBITDA for the full year 2015 are slightly above the guidance communicated on November 21, 2015. MPS has one of the largest installed bases in the industry and a large global base of customers.

 

The MPS acquisition enhances Marel’s position as a leading global provider of advanced systems and solutions to the poultry, meat and fish industries and is fully in line with the company’s previously announced growth strategy. This step will contribute to a more balanced revenue split between industry segments and geographies.

 

On a pro-forma basis, Marel’s meat segment will now contribute to approximately 30% of revenue and EBITDA of the company.

 

Its advisory cost associated with the MPS acquisition is EUR3.3 million (US$3.6 million) and is fully accounted for in Q4 2015 results of Marel.