Publically listed confectionery company Lindt & Sprüngli remains the most interesting acquisition target in terms of its premium portfolio and its post-recession weakened state, with Asian conglomerate Lotte a potential frontrunner, argues a market insider.
“The purchase of Lindt would instantly give the Lotte group a global standing within the confectionery arena, as up until now its acquisitions have been relatively minor players,” said Ildikó Szalai, packaged food analyst at Euromonitor International.
Asian group Lotte has publically stated its intention to increase its share of global confectionery sales by 20 per cent in the next few years. July saw it acquiring the Wedel business in Poland from Kraft Foods, which it has been forced to sell under European Commission competition rules following its takeover of Cadbury.
Meanwhile, the acquisition of Belgian firm Guylian in mid-2008 for €105m spring boarded the Asian conglomerate into the European premium chocolate sector.
“Over 80 per cent of Lotte’s sales come from mature markets in Japan and Korea. The group is looking to grow its confectionery portfolio, and while India or China might may more logistic expansion target markets, takeover of a significant premium European confectionery asset would better serve its global growth plans,” added Szalai.
The multinational has its headquarters in Tokyo, and has annual sales of approximately $40bn (€32bn). Founded in 1948 as a chewing gum company, it currently operates in a variety of sectors, including food and confectionery, retail, travel and tourism, industrial chemicals and construction, and finance.
As the original business, confectionery is at the core of the Lotte Group's operations and its confectionery portfolio includes leading Asian brands, such as Xylitol, Koala March and Ghana. It is the largest chewing gum manufacturer in Asia and third largest in the world.
Premium chocolate manufacturer Lindt was impacted significantly by the recession, argues the analyst, but its takeover potential, with consumers migrating to private label and cheaper brands, should be accurately assessed by any potential buyer.
“However, any companies interested in acquiring a standalone confectioner should really act now, as Lindt’s current EBIT margins are likely to yield a very favourable purchase price," argues Szalai.
Kepler Capital Markets analyst Jon Cox earlier this year predicted that Lindt was an ‘obvious' takeover target for Nestlé.
“While many companies are probably interested in Lindt, I think Nestlé would be a closer cultural fit compared to a US company. Nestlé lacks a global premium chocolate brand and I think it is now or never,” Cox told this publication.