Marel has successfully closed the acquisition of Wenger Manufacturing, a global leader in processing solutions for the growing pet food, plant-based protein and aquafeed markets. The USD 540 million acquisition brings together two highly complementary product portfolio that will be able to meet the growing demand for high-quality, sustainably and cost-effectively processed food and feed.
Wenger, as a new business area and the fourth pillar of the business model along with poultry, meat and fish, will be part of Marel’s segment financial reporting for the third quarter of 2022, and the acquisition is expected to improve margins and earnings.
On a pro forma basis, this new business segment will account for about 10% of Marel’s total revenues and a combined 12% of its earnings before interest, taxes, depreciation and amortization (EBITDA).
The agreement to acquire Wenger, as announced on April 27 this year, was subject to customary closing conditions, such as antitrust rules and approval by Wenger shareholders, which were finally finalized months later.
According to Marel, the company is committed to investing in the combined business to drive business synergies and accelerate growth.
Planned initiatives include expanding manufacturing capacity to respond to high demand in Wenger’s core markets. Marel’s global reach and digital platform will support a more proactive after-sales approach to better serve customers worldwide and from the customer relationship cross-sell the combined portfolio.
The new segment will be run on a standalone basis, reporting to Arni Sigurdsson, Chief Strategy Officer and EVP of Strategic Business Units. As of Q3 2022, this new platform will become part of Marel’s segment reporting alongside the poultry, meat and fish business segments.
Attractive new markets
This new platform investment, the company said, represents an important entry point into new and attractive growth markets, where Wenger’s leadership in extrusion and drying technologies are an anchor point in a new segment of Marel’s business model.
In addition, they detailed, Wenger shares Marel’s focus and passion for innovation and commitment to best-in-class products, backed by an experienced team and long-standing partnerships with customers ranging from top-tier animal and pet food processors to emerging companies in plant-based proteins.
This has resulted in Wenger’s healthy profitability, with an EBIT margin of 14-15%, strong cash flow and a solid return on capital investment.
A segment in considerable growth
There are immediate opportunities for growth and value creation by leveraging the reach of Marel’s digital platforms in Wenger’s attractive markets. The global pet food and aquafeed markets are estimated to exceed EUR 100 billion and EUR 50 billion, respectively, at 5-6% growth per annum.
The plant-based protein market is estimated at EUR 7 billion and is expected to grow at 15-20% per year.
The market targeted by Marel and Wenger in pet food, plant-based protein and aquafeed solutions and service is estimated to be around EUR 2 billion with expected annual growth of 4-6%, in line with Marel’s long-term market growth expectations.
Ensuring products of high nutritional value
Wenger is a true leader in providing solutions and services to the pet food and aquafeed industries and, in recent years, has made its mark in the fast-growing plant-based protein market, with best-in-class solutions positioned at the core of the value chain.
The two companies have complementary technologies and product portfolios that will strengthen the value proposition with solutions for vegetable protein processors. Wenger’s drying and extrusion technologies are a solid anchor point in the value chain that defines the texture and quality of the final product.
Marel’s complementary product portfolio will add technologies such as weighing, grading, inspection, low pressure forming and heat treatment, all with the goal of ensuring high nutritional value products that are processed in a safe and sustainable manner.