BRAZIL – Arla Foods has divested its 8% share in the company to Grupo LaLa, following a change in ownership of the Brazilian largest dairy company Vigor S.A.
Arla’s investment in Vigor, started in 1986 when Arla entered a 50/50 joint venture partnership with Vigor under the name Dan Vigor, which consisted of local cheese production under the Danubio brand.
Arla exchanged the joint ownership of Dan Vigor for an 8% share in Vigor in 2014.
“Arla has operated in the Brazilian market for decades; however a co-ownership of Vigor no longer serves our strategic purpose.
Our decision to divest is the best solution for Arla as we continue to focus our strategic investments on creating sustainable growth through our business in Asia, Africa, the Middle East and the USA,” says Executive Vice President in Arla Foods, Tim Ørting Jørgensen, who is responsible for Arla’s international business.
Financing for the transaction would include a bridge loan, followed by a combination of long-term debt and additional equity of approximately US$550 million, of which an estimated US$315 million will be committed by Lala’s current shareholders.
The Lala Group’s Board of Directors agreed to propose to company shareholders the acquisition of up to 100% of the shares of Brazilian dairy giant, Vigor Alimentos, S.A. and the shares of Itambé Alimentos, S.A. for an implied value of US$1.84 billion.
It said in a statement that a proposal to acquire Vigor from investment holding company J&F Investimentos SA, as well as a borrowing plan and potential share offering, would go before the Board.
The transaction is subject to certain approvals by Grupo Lala’s shareholders’ meeting, governmental authorizations, shareholder agreement, and other contractual conditions.