SWEDEN – A few weeks after closing an acquisition deal with the Hungarian sandwich business Khell-Food, Orkla Confectionery & Snacks has yet again invoked its M&A strategy, going for Sweden-based confectionery maker Bubs Godis.
Bubs offer a wide range of sweets, with a strong position in the Nordic’s pick ‘n’ mix confectionery market. In addition, Bubs also sells products in bags under brands such as Skalle and Goody, generating a SEK211m (US$20.2m) turnover in the year to 30 June 2022.
The company was founded in 1992 by the Lindström family, who have sold their stake to Orkla. Its CEO, Niclas Arnelin, also has a “small” equity ownership, which is part of the sale.
Orkla said Arnelin will remain with the business when it becomes a subsidiary of Orkla Confectionery and Snacks Sverige.
Ingvill Berg, CEO of Orkla, said that the acquisition is “well-aligned” with the company’s strategy to strengthen its presence in the Nordic markets.
She added that bulk confectionery is a growing category, and even when it is sold as a pick ‘n’ mix, consumers prefer well-known brands like Bubs”.
The growth is projected to reach US$232.08 billion by 2027 with a CAGR of 3.4% in the forecast period of 2022–2027 by Market Data Forecast.
To tap into the rocketing growth of the confectionary segment, Patrick Axzell, CEO of Orkla, said Orkla will build further on the company’s strategy while also exploiting the advantages of the company becoming part of Orkla including Bubs’ distribution network, among other things.
In November, Orkla denied that the Nordic food group has started a sales process for its ingredient division.
A spokesperson for Orkla said the company has “not started a structured sales process of Orkla Food Ingredients” but suggested the business might seek a partner.
When announcing a reorganization of the company into 12 business units, along with potential “acquisitions, joint ventures, stock-market listings and divestments of companies”, Selte in October 2022 revealed a potential sale of Orkla Food Ingredients (OFI) would fit within the framework.
He explained: “The food ingredients sector is fragmented, with significant potential for further consolidation and growth. Based on these opportunities, we will now initiate a process to seek a long-term partner for OFI to accelerate growth and value creation.”
Moreover, the company intends to adopt a long-term, industrial approach to the portfolio companies as active owners and will work through the company boards to continue to build on the deep consumer insight and experience that they have acquired in developing leading brands.
Selte also acknowledged that Orkla plans to pursue an active portfolio management policy, targeting rapidly growing consumer segments and markets.
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