Grupo Lala has negotiated a deal to acquire Brazilian dairy firm Vigor, and its stake in Itambé, and will put the proposal to its board of directors tomorrow.
The Mexican dairy producer said it has “concluded the negotiation process” with Vigor, whose owner, J&F Investimentos, revealed plans to offload Vigor in June as part of plans to cut debt and strengthen the group’s financial position.
The embattled owner of meat packer JBS has come under intense scrutiny since admitting blame in the so-called carne fraca scandal – a widespread food corruption probe in Brazil alleging that the country’s largest meat processors had bribed health officials to overlook contaminated or rotten shipments of meat.
Lala has not yet revealed the agreed figure – though in March, when PepsiCo was in discussions to acquire Vigor, the sale price was believed to be around $2 billion.
It will put the proposed acquisition before its board of directors tomorrow and will convene a conference call for investors on Friday if the deal is approved.
It comes a week after Grupo Lala’s second-quarter results showed that it was in a strong financial position: net sales were 16% higher at MXN 14.97 billion ($842.4 million) and gross profit was up 14.6% to MXN 5.79 billion ($325.7 million), driven in part by growth in Lala’s home market of Mexico.
But despite strong domestic performance, the Torreón-based company has sought to grow its business outside of Mexico in recent years. It set up a US operation after acquiring the branded business of Laguna Dairy, and its plans for a $30 million dairy production plant in Guatemala were described as an effort to “consolidate the group’s presence in the Central American region”.
The acquisition of Vigor will play into that wider strategy for international growth.
Vigor is a leading company in the Brazilian dairy market with more than 7,600 employees and 67,000 points of sale in Brazil. It operates 11 milk collection centres, 14 production plants and 31 distribution centres, Grupo Lala said, with brands including Vigor, Danubio and Faixa Azul.
Vigor also makes Serrabella cheese, Leco juices and flavoured milks, and Amelia – a range of baking products including Chantilly cream, margarine and pastries.
The business is celebrating its centenary this year.
It also has a stake in Itambé – the Brazilian dairy company with a complete portfolio of dairy products, including powdered milk, condensed milk, milk caramel, yogurt, dairy products and UHT milk. All are sold under the Itambé brand.
In March, BRF – the other major meat company involved in the carne fraca scandal – tapped Itambé’s former CEO, Alexandre Almeida, as its new head of operations in Brazil in an attempt to regain control over its local supply chain.
© FoodBev Media Ltd 2020