KKR-backed Malteries Soufflet to acquire United Malt for A$1.5bn

The acquisition will combine two of the world’s leading malt businesses and ends United Malt’s short life as an independent business after spinning out from GrainCorp in 2020.

United Malt Group, the Australian Securities Exchange-listed malting business spun out of grain handling giant GrainCorp in 2020, has accepted a binding takeover bid from private equity-backed European malt firm Malteries Soufflet.

KKR-backed Malteries Soufflet will pay A$5 ($3.35; €3.08) cash per share to acquire 100 percent of United Malt, a deal that values the latter at a little less than A$1.5 billion. The offer represents a 45.3 percent premium to the A$3.44 closing price of United Malt’s shares on March 24, 2023, the last day before Malteries Soufflet’s offer was announced, and a 48.6 percent premium to the one-month volume weighted average price of A$3.37 per share.

Following a period of due diligence and in the absence of a superior proposal, the board of United Malt has decided to unanimously recommend that shareholders vote in favor of the deal.

The offer remains unchanged from Malteries Soufflet’s first bid in March, despite market speculation that the suitor was considering returning with a reduced offer after United Malt posted disappointing financial results for the 2022 financial year.

Results have improved since then and in its most recent half-year results published in May, covering the six months to March 31, 2023, United Malt reported that group revenue increased by 16 percent to A$756.6 million thanks to improved contract pricing and higher barley prices. Underlying EBITDA was A$52.7 million, an increase of 1 percent on the same half-year period in 2022.

The firm signaled that it expected financial performance to continue to improve throughout the rest of 2023.

United Malt floated on the ASX in March 2020 to create the world’s fourth-largest maker of malt with operations in Australia, Canada, the UK and the US, following a demerger from its parent company, GrainCorp. The latter continued to also trade on the ASX under its original name, with its malting assets separated into the newly-listed business.

The demerger followed a drawn-out and ultimately unsuccessful bid by little-known asset manager Long-Term Asset Partners to acquire the combined GrainCorp business in its entirety for approximately A$2.4 billion.

Malteries Soufflet is one of the world’s leading malt businesses and operates 28 facilities across Europe, Latin America, Asia and Africa. KKR acquired a significant minority stake in the firm for €440 million in 2021 alongside co-investors Bpifrance and Crédit Agricole Group. Malteries Soufflet is itself a subsidiary of Soufflet Group, a French-headquartered business owned by InVivo Group.

In a statement on the deal, United Malt managing director and CEO Mark Palmquist said: “The strategic rationale for establishing United Malt as a standalone malt company included enabling the company to pursue a separate growth agenda and potentially participate in industry consolidation opportunities.”

“The scheme, if implemented, will provide an attractive value outcome for United Malt shareholders […] United Malt will have the opportunity to build on its strategic progress since the demerger and leverage the combined strengths and larger platform of both businesses to further capitalize on key growth opportunities.”