Mid Europa Partners (MEP) recently finalized a €575m ($631.4m) takeover of Bambi and two other leading food and beverage businesses in Serbia.
The transaction saw MEP, a leading buyout investor focused on the growth markets of Central and Eastern Europe and Turkey, take control over Bambi’s parent companies Danube Foods Group BV and Clates Holding BV (together DFG).
DFG owns the leading branded fast-moving consumer goods (FMCG) platform in the former Yugoslavia.
DFG’s subsidiaries include Bambi, the leading Serbian confectionery producer; Imlek and Mlekara Subotica, which on a combined basis represent the largest independent dairy business in the region; and Knjaz Milos, the leading Serbian producer of mineral water and other non-alcoholic beverages. The new owner plans to invest around €100m ($109.9m) in DFG over the next three to five years.
Serbia’s biscuit industry goes regional
MEP revealed that it plans to group its new Serbian based assets, including biscuit maker Bambi, into a new holding company named Moji Brendovi. “We plan to consolidate the market, expand our business in all of the segments and become a stable regional leader,” said Andrej Jovanovic, director general of the Moji Brendovi holding.
The Bambi biscuit brand, controlled until recently by DFG, has a leading 21.40% stake of the country’s biscuit market, followed by Atlantic Grupa’s Petit Beurre (6.80%) and Koncern Swisslion Takovo’s Petit Beurre (6.80%), according to Euromonitor International.
Bojan Radun, the new CEO of Bambi, said his plan was to ensure that Bambi grows into a regional leader in the confectionery industry. “Serbian consumers voted five years in a row for [Bambi's flagship biscuit brand] Plazma when choosing their favourite Serbian brand and [Plazma] is also one of the top 10 [brands] in the region,” said Radun, formerly a CEO at Serbia’s leading fruit juice maker Nectar.
DFG held the top position in the Serbian market as the leading biscuit manufacturer in 2014 in terms of market share. Atlantic Grupa, Koncern Swisslion Takovo, Banini and Medela held the following four positions in the ranking, respectively.
Radun confirmed that other acquisitions are planned, as part of a wider consolidation process in the region, adding that Bambi also needs to expand its portfolio and modernize further.
Cookie and sandwich biscuits
The retail value of the Serbian biscuit market is expected to reach $283.2m this year, up by 1.4% from $279.2 in 2014, expects Euromonitor. The organization forecasts the value of the country’s biscuit market will grow steadily to $300.7m in 2019, based on a compound annual growth rate (CAGR) of 1.5%.
“The forecast period should see more companies follow the example of category leader Bambi Banat and step up investment in innovation in an attempt to improve their competitive positions within biscuits. Given their relative immaturity, cookies and sandwich biscuits are likely to be among the busiest categories when it comes to new launches,” predicts Euromonitor.
In terms of volume, the Serbian biscuit industry is expected to manufacture 38,200 tonnes in 2015, up by 1.3% from 2014. Euromonitor expects that the market’s output will reach 40,800 tonnes by 2019.
“Increasing competition has recently led several [Serbian] biscuits manufacturers step up investment in new launches and marketing activities, and this will also help to sustain the positive development of the category,” concluded Euromonitor.
Financial support for the deal
London-based MEP secured the winning bid for DFG with the support of its equity co-investors, the European Bank for Reconstruction and Development (EBRD) and leading commercial banks.
The EBRD is supporting the acquisition with a €60m ($65.9m) subordinated loan and a €20m ($21.9m) equity investment to boost competitiveness and standards by attracting new investment. “Mid Europa has been a long-term partner of the Bank and it has some of the most prominent companies in the region in its portfolio. We are happy to support them in the region and the sector,” said EBRD Head of Agribusiness for central and south-eastern Europe, Miljan Zdrale.