29 April 2016
Silverfleet Capital sells meat product casings manufacturer Kalle to Clayton, Dubilier & Rice
Silverfleet Capital, the European private equity firm specialising in mid-market buyouts, has agreed to the sale of the Kalle Group to a fund managed by Clayton, Dubilier & Rice (CD&R). The deal is still subject to anti-trust clearance. Kalle is a leading global supplier of industrially produced casings for meat products. Silverfleet Capital expects to achieve an investment multiple of 3.5 on an investment of €71.5 million. The Internal Rate of Return (IRR) is 22.5 per cent.
Silverfleet Capital acquired a majority stake in the Kalle Group in 2009. Today, Kalle employs some 1,700 people operating from 16 production facilities in 9 countries serving more than 100 countries around the globe. The company has doubled its turnover since 1997 to above €281 million in 2015. The primary drivers for this robust development are the company’s innovative product range and its expansion into high-growth regions. Already a major brand in the United States as well as in Western and Eastern Europe, Kalle is now building its profile in the high-growth markets of South America and Asia.
Since acquiring the company, Silverfleet has driven forward Kalle’s international expansion and further strengthened its market position. Kalle now serves over 100 countries. The acquisition of US-based net casings manufacturer Jif-Pak in 2010 gave growth a further boost, with turnover of the new subsidiary having almost doubled to more than $47 million in the meantime. This add-on acquisition also considerably increased the extent of Kalle’s operations in the United States. Alongside geographic expansion, the company’s innovative capability has been the other major driver of growth. Over the past few years, Kalle has redefined the protein casing market with its new range of value-added casings. These add value by eliminating a number of key steps in the meat production process. For example, they can be used to transfer smoke, colour and/or seasoning directly onto the filling while the product is being cooked, thereby dispensing with several costly operations. Value-added casings are a major growth driver and the fastest growing segment in the Kalle Group.
“Silverfleet supported Kalle’s international expansion and thus helped to drive rapid growth. Kalle is a very profitable business in an attractive market with non-cyclical growth. Thanks to its innovative capability, which is unique within the industry, Kalle is constantly bringing new top-selling products to market,” said Guido May, a partner at Silverfleet Capital. “We would like to thank the Kalle management team for what has always been a close and very successful working relationship and a good example of Silverfleet Capital’s proven ‘buy to build’ approach. Kalle is now excellently positioned as a leading global supplier of industrially produced casings for meat products. The prospects for continued growth over the coming years are thus very good.”
Kalle reinvests a significant percentage of its annual turnover in research and development, with a quarter of all revenue currently being generated by innovations developed over the past 10 years. In addition to value-added casings, the company makes a wide range of fibrous, polymer and textile casings, for example its high-performance polymer casing. It consists of up to seven different layers, each of which can be individually configured to control characteristics such as meat cling, individual form and the permeability of water and oxygen. Kalle is currently the world market leader in fibrous casings and the global number two in polymer casings. In addition to its core casings business, Kalle produces functional ingredients and supplies one third of global demand for high-quality sponge cloths.
“Over the past seven years, we have enjoyed very profitable growth and continued to develop our technological edge and regional footprint. Silverfleet Capital has always been very supportive of our innovation-led approach and has backed the growth of our product range with impressive success. While we look back with gratitude, we are now very excited about developing our future together with CD&R, supporting us in making full use of our opportunities and raising Kalle to the next level,” said Kalle CEO Dr. Carsten Heldmann.
The purchase is expected to be completed around the end of the first half of 2016, subject to approval by the competition authorities.
Advisors: Rothschild (M&A), Kirkland & Ellis (legal), Roland Berger (Commercial), PWC (financial & tax)