Yildiz Holding AS, the Turkish company that owns the Godiva chocolate brand, is in talks to acquire businesses in the Middle East and eastern Europe to compensate for slower sales growth in its home market.
Yildiz is looking at confectionery companies and other food producers as potential acquisitions, Cem Karakas, chief financial officer of the Istanbul-based company, said in an interview Oct. 17.
Yildiz, owned by the Ulker family, bought Godiva from Campbell Soup Co. for $850 million in 2007 and aims to raise total sales to as much as 13 billion liras ($7.2 billion) this year from 11.6 billion liras in 2011, Karakas said. Sales at its food businesses, account for 85 percent of the group’s revenue, and should rise as much as 15 percent this year, he said.
“In the future, growth at our food business is expected to be at the same level or slower than the food industry’s growth in Turkey,” Karakas said. “Therefore this shortfall is being compensated with our expansion abroad.”
Private consumption in Middle East and African economies will grow faster than in China and India in coming years, the executive said.
Yildiz Holding owns Turkey’s biggest biscuit and cake maker Ulker Biskuvi Sanayi AS (ULKER), private equity firm Gozde Girisim Sermayesi Yatirim Ortakligi AS (GOZDE) and wholesale food supplier unit Bizim Toptan Satis Magazalari AS. (BIZIM) Yildiz isn’t considering buying companies with annual sales of less than $50 million unless the target offers a “substantial difference in its business line,” Karakas said.
“Yildiz is one of the 10 largest confectionery groups in the world with $2 billion of sales coming only from confectionery including Godiva, and this gives an idea about our strength,” he said.
The group may also consider building a plant in the Middle East through its Ulker unit, Karakas said.
The company plans to open as many as 20 stores to sell luxury Godiva chocolates in the Persian Gulf states from next year after setting up a joint venture with Dallah Group of Saudi Arabia, Karakas said. The first shop will be opened in Jeddah this year, he said.
Yildiz is open to form similar joint ventures in other places, Karakas said. The company has 10 production joint ventures with food companies including McCormick & Co. (MKC:US), Kellogg Co. (K:US), Nissin Foods Holdings Co. of Japan and Gumlink A/S of Denmark.
Yildiz Holding owns about 80 percent of Godiva, which has more than 400 shops around the world, while the remainder is owned by Ulker Biskuvi, according to the company’s website.
The conglomerate aims to complete a reorganization at its confectionery units in early 2013. The company will reduce the number of businesses under the Ulker brand to 3 from 24, including biscuits, chocolate and cake production, Karakas said. “We are now 90 percent complete.”
“This simplified structure will be more understandable by international investors,” Karakas said.
Yildiz will have a presentation for 250 international investors by the end of this year to explain the reorganization at Ulker.
“We want to increase the share of international investors in the free float to 25 percent by the end of this year and to 70 percent eventually from 19 percent now,” Karakas said.
Yildiz Holding may consider sales of sukuk, or securities compliant with Islamic rules, and eventually bonds, Karakas said.
Bizim Toptan, the group’s food wholesaler, will have 140 stores by the end of this year including 13 stores that serve to hotels, restaurants and cafes, and it plans to add 15 stores every year, Karakas said.
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