GERMANY – The Bell Food Group, leading meat and convenience foods processor has announced that it plans to sell its German sausage business to Zur Mühlen Group, a leader in the meat and sausage industry in Europe.

The acquisition includes Bell Food’s processing facilities in Suhl and Börger, with changes expected changes for the administration and central services departments.

The transaction which is subject to regulatory and competition approvals will see around 400 employees at the facilities transfer to the Zur Mühlen Group.

Bell Food attributes the divestment to declining retail market for meat and sausages in Germany as a result of oversupply of the products.

The company said the deal leaves it to focus on expanding its position in the segment for top-quality German and international air-dried ham products.

“The sale of the sausage business will affect jobs in the Administration and Central Services departments of Bell Germany.

“Negotiations with the employee representatives regarding a social compensation plan will be initiated in good time and the statutory participation rights will be respected in full,” said the companies in a statement.

According to them, the sale will reduce net revenue by some CHF 85 million (US$87.18 million) and is expected to have a positive impact on the Bell Food Group’s cash flow and EBIT of some CHF 10 million (US$10.2 million) per year from 2020.

Bell said the sale will also incur mostly non-cash one-off costs of around CHF 35 million (US$35.8 million) in the 2019 financial year.

Earlier this month, Bell Food which manufactures fresh meat, poultry and charcuterie said that it expected half-year profits to decrease partially blamed on the outbreak of African Swine Fever in China.

Bell said last week its EBIT profits for the six months through June are likely to be below CHF50m, compared to CHF55.2m a year earlier.

This could also be blamed on higher pork prices during the year, leading to higher procurement costs in the European Union.

In 2018, Bell Food Group acquired 50.2% stake in soup and sauce producer Hügli, in a deal worth CHF 915 ($948) per share.

The company said the acquisition would help to achieve significant growth in the convenience food market, including soups, sauces and meat alternatives.