Lamb Weston Holdings has entered into an agreement to purchase the remaining equity interests in its European joint venture with Meijer Frozen Foods BV for €700 million in cash and common stock of Lamb Weston.
“Lamb-Weston/Meijer (LW/M) was built over the last 28 years, and we’re grateful to Meijer Frozen Foods for their longstanding partnership,” said Tom Werner, president and chief executive officer of Eagle, Idaho, USA-headquartered Lamb Weston. “The joint venture has served as a strong platform to drive growth in Europe and the Middle East, as well as to support our global customer base across our key international markets. This transaction firmly aligns with Lamb Weston’s long-term capital allocation and acquisition framework, and we believe it will strengthen our manufacturing footprint by leveraging a truly global supply chain to better serve our customers and position us to take advantage of growth opportunities in Europe, the Middle East and Africa.”
Kees Meijer, chief executive officer of Meijer Frozen Foods, commented: “We’re proud of the business we’ve built together to create a market leader in Europe. We remain confident in the long-term outlook for Lamb Weston and the global frozen potato category. By holding an investment in common stock of Lamb Weston after the transaction closes, we sustain our strong belief in a bright future for the business.”
Upon completion of the transaction, Lamb Weston will own 100% of Lamb-Weston/Meijer v.o.f., formerly operated as a 50/50 joint venture between a wholly-owned subsidiary of Lamb Weston and Meijer Frozen Foods. Lamb Weston will pay transaction consideration of €700 million, comprised of €525 million in cash and €175 million of its common stock. It is anticipated that the deal will be finalized during the second half of fiscal 2023, subject to regulatory approvals. The company expects to fund the cash portion of the acquisition with new borrowings and cash on hand. Lamb Weston’s targeted long-term net leverage range1 of 3.5x to 4.0x remains unchanged.
Headquartered in the Netherlands, Lamb-Weston/Meijer ranks among the leading suppliers of frozen potato products in Europe, the Middle East and Africa, with approximately €954 million in net sales in fiscal 2022 (including €114 million of net sales from its former joint venture in Russia).
The transaction will give the company ownership of an additional five manufacturing facilities worldwide, including four facilities in the Netherlands and one in the United Kingdom, as well as a sixth factory through a 75% interest in a joint venture in Austria. These facilities produce nearly two billion pounds (910,000 metric tons) of finished frozen products annually. In addition, upon completion of the deal, the former joint venture’s approximately 1,500 workers will become employees of Lamb Weston.
As a 50% owner of Lamb-Weston/Meijer, the company recorded its 50% portion of earnings in Equity Method Investment Earnings in its financial statements. As of the transaction closing, Lamb-Weston/Meijer will be a wholly-owned subsidiary of the company, and Lamb-Weston/Meijer’s results will be fully consolidated in its financial statements.
