Olam beefs up spices portfolio with acquisition of leading US chile pepper business

USA – Olam Food Ingredients (OFI), is seeking to expand its spices portfolio to meet the rising demand for bold, authentic flavours with the acquisition of US-based chile pepper business (CPB) of major maker of condiments and sauces, Mizkan America Inc. for US$108.5 million.

According to the company the total consideration includes an estimated net working capital of US$55.0 million, subject to net working capital adjustment at closing.

The transaction awaits US antitrust regulatory approval and customary closing conditions which are expected to complete in January 2021.

The deal, which is being made through Olam’s subsidiary, Olam Americas marks the first major acquisition for OFI since the new Olam International operating group was created earlier this year.

“This is a fitting first acquisition for OFI, as CPB fulfils OFI’s vision to help its customers meet consumer preferences for health, nutrition, natural and authentic ethnic flavors, as well as their increasing demands for understanding the provenance and environmental impact of their food choices,” OFI CEO, A. Shekhar said.

The acquisition will complement operations of Olam Spices company that runs a red chili manufacturing facility in Las Cruces, New Mexico, less than 60 miles from Mizkan’s Deming operations.

The close proximity will enable an effective combination of established green and red chile market capabilities, and allow for even stronger manufacturing and product development, coupled with taste and flavour innovation.

“This is a fitting first acquisition for OFI, as CPB fulfils OFI’s vision to help its customers meet consumer preferences for health, nutrition, natural and authentic ethnic flavors.”

Olam Food Ingredients CEO – A. Shekhar

It will also supports deeper grower relationships in the region, particularly with those growing specialty varieties, maintaining close farmer relationships and fully integrated supply chains.

This also allows Olam Spices to strengthen and expand its chile sourcing network — notably in Hatch Valley, New Mexico.

“Combining CPB’s specialty and green chile range with our red chile portfolio which includes paprika, chile powder and chile pepper, means we can deliver a wider range of ingredient solutions for customers looking to satisfy the rising demand for authentic Mexican flavors – already the third most popular cuisine in the country,” Olam Spices CEO, Greg Estep, said.

Olam Spices is the leading supplier of dried garlic, onion and chile-based ingredients and a global leader for pepper, tropical spices, purées and parsley.

With its facility in Las Cruces, New Mexico, it is the largest organic chile grower and processor in the US, with full traceability from seed to delivery.

It is one of OIL’s five leading food ingredient businesses, which along with Cocoa, Coffee, Nuts and Dairy, have come together under the OFI banner to co-create exciting category applications and solutions for its customers and their consumers.

Crowell & Moring LLP provided legal representation to Olam in the transaction. Lazard Middle Market served as exclusive financial advisor to Mizkan on the sale of its chile pepper business, and Locke Lord, LLP served as its legal advisor.

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