Princes Acquisition: Key Details, Impact, and What Comes Next

Newlat Food S.p.A.'s acquisition of Princes Limited from Mitsubishi Corporation marks a significant shift in the European food industry. The £700 million deal, finalized on July 30, 2024, creates the New Princes Group, a formidable entity with a combined turnover of €2.8 billion. This strategic move aims to leverage synergies and expand market presence, setting ambitious growth targets for the future.

What Is Princes?

Founded in 1880, Princes Group is a major European food and drink company specializing in sourcing quality products globally. They produce these items across state-of-the-art production sites and deliver them to retail, wholesale, food service, and industrial customers. Princes Group stands out with its robust global supply network, strong commitment to sustainability, and active engagement in human rights impact assessments, ensuring quality and efficiency in their international supply chain.

Who Acquired Princes?

Newlat Food S.p.A. is an innovative and growing food company with a diverse portfolio of category-leading brands. It operates in various sectors, including dairy, wheat, gluten-free, protein-free, children's products, and instant meals. Key products range from milk, cheese, and yogurt to pasta, bakery items, and ready-to-eat meals. With 18 production facilities in Italy and several others across Europe and Mauritius, Newlat holds a significant market position, boasting a 2023 turnover of 793.3 million euros.

When Was Princes Acquired?

Newlat Food S.p.A. completed the acquisition of Princes Limited on July 30, 2024. This acquisition, valued at £700 million, was initially agreed upon in May 2024. The timing of this deal is significant as it aligns with Newlat's strategic growth plans to expand its market presence and product offerings. This move comes amid a broader trend of consolidation in the European food industry, aiming to create synergies and enhance competitive positioning.

Why Was Princes Acquired?

• Market Expansion: The acquisition of Princes by Newlat Food S.p.A. significantly enhances the group's market presence across Europe and other regions. The combined entity, New Princes Group, will have a global network of 31 plants and aims to achieve €5 billion in revenues by 2030, positioning it as a leading multi-brand and multi-product food company in Europe.
• Technology Integration: While the acquisition announcement does not explicitly mention technology integration, the focus on commercial and operational synergies suggests potential improvements in operational efficiencies. The merger aims to streamline processes and enhance productivity, leveraging the combined expertise and resources of both companies.
• Competitive Advantage: The merger of Newlat and Princes creates a diversified portfolio across 10 distinct categories, providing a significant competitive edge in the European food industry. The combined entity's large international manufacturing platform, iconic brands, and commitment to quality position it as a leading player, enhancing its market positioning and profit growth.

Acquisition Terms

• Acquisition Price: £700 million
• Payment Method: £650 million in cash and £50 million in Newlat shares
• Key Conditions or Agreements:
  • Consultation with the Dutch Works Council of Princes before the final purchase agreement is signed
  • Receipt of customary regulatory approvals
  • Finalization of the Group’s audited accounts
  • Consultation with the European Works Council
  • Princes will retain its identity and operate as a subsidiary of the New Princes Group
  • Mitsubishi Corporation will become the second-largest shareholder in the new company, New Princes, with 21.2% of economic rights and 15.1% of voting rights
  • Newlat Group will own around 44% of the new company
  • Newlat will receive a 200 million euro loan from Newlat Group and a 300 million euro loan from a pool of international banks to finance the purchase

Impact on Princes

The acquisition of Princes by Newlat Food S.p.A. brings significant changes to the company's operations and management. The newly formed New Princes Group will see a revamped leadership structure, with Simon Harrison continuing as CEO and Angelo Mastrolia as Chairman. A UK-based Operating Board will support the new structure, featuring key roles such as Chief Operations Officer and Chief Strategy Officer. This reorganization aims to streamline operations and enhance strategic decision-making, leveraging the combined expertise of both companies.

Product offerings and services are set to expand considerably under the New Princes Group. The merger will double the product categories available, incorporating Princes' tinned fish and Napolina sauces into Newlat's diverse portfolio, which includes pasta, dairy, and bakery products. This expansion is expected to enhance customer satisfaction by providing a broader range of high-quality products. While specific employee and customer reactions are not detailed, the optimistic statements from executives suggest a positive outlook for both groups. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.