Roshen owner wins Ukraine election: Long live the president! But will his choc firm get the chop?
Poroshenko stepped outside his usual role of so-called ‘candy king’ as owner of Ukraine’s biggest confectionery firm, Roshen, recently to run for Ukrainian presidency. In the run up last month he was reported as telling German newspaper Bild that if he were to win, he would “wipe the slate clean” and sell the company to keep business and politics separate and focus solely, “on the well-being of the nation.”
Although the company has neither confirmed nor denied such a move after Poroshenko won the national election two weeks ago, speculation around who might bid in the event of a sale has been rife with Nestlé and Mars being tipped as potential buyers by financial commentators.
However, Marcia Mogelonsky, Mintel food and drink director of insight, told ConfectioneryNews South Korean confectionery manufacturer Lotte was a more probable suitor. “It seems to me if anyone is going to buy Roshen, it would be Lotte,” she said.
Roshen would fit nicely into Lotte’s recent strategy of moving steadily into the European region, she observed. Lotte also made a number of other high profile acquisitions in Europe in recent years including a $164m deal for Guylian in Belgium in 2008, an estimated $250m splurge on Wedel in Poland from Kraft Foods and $18m for Pakistan firm Sulemanji Esmailji both in 2010.
“Lotte has put down markers in a number of Eastern European/Central Asian countries, but given the company’s ambitions, it can expand its presence further through another strategic buy,” Mogelonsky wrote in an article speculating Lotte’s next move.
Last year Lotte – one of the top 20 global confectioners with reported sales of nearly $1.2 bn in 2012 - purchased a controlling stake in Rakhat, Kazakhstan’s largest confectioner.
It was unlikely a Russian confectioner like the part state-owned United Confectioners would have the money to buy, and instead earmarked Turkish confectioner Ülker as a possible second contender as Roshen could be well placed to bring it further into the Easter European fold.
Pieces of the acquisition puzzle
“I don’t see why Nestlé and Mars have been singled out. Probably because they’re big and people know them,” Mogelonsky said. She suggested the move might not correlate with Nestlé’s recent efforts to present itself as a healthy company, while Mars has been relatively inactive of late in terms of acquisitions.
In November Roshen rubbished reports from a Russian news agency that it was to sell to the Norwegian group Orkla, a firm that had made some recent moves in the CIS region.
Melting business with politics
Ongoing political instability in the region was something that could not be ignored. “Moving into any unsettled region is dangerous,” she said. “There is still a lot of friction.”
“It’s chocolate, but it’s really the politics that’s driving it not the quality of the product or anything. It makes us all scurry back to our history books.”
Poroshenko said he would give up the business to avoid becoming an oligarch.
“I am not an oligarch and an oligarch should never become president. For me, an oligarchy means that pressure is built up in a conscious way in order to use the political system for business deals. I have always done the opposite. My business was on a precipice in past years because Yanukovych and Russia were fighting me for political reasons,” Bild reported.
Roshen has been embroiled in a game of political tit-for-tat with Russian authorities and the country's dominating confectioner United Confectioners since last year.