Lamb Weston / Meijer buys potato division of Oerlemans Foods

02 May 2017

Potato producer Lamb Weston / Meijer has acquired the potato division of Oerlemans Foods, a Netherlands based player. The deal sees both parties enjoy strategic benefits – it allows Lamb Weston / Meijer to extend its production capacity by nearly 100,000 tons per year, while the divestiture provides Oerlemans Foods with the opportunity to focus completely on its key markets: vegetables and fruit.

Since the acquisition of Oerlemans Foods in 2014 by H2 Equity Partners*, a private equity firm, the Venlo based firm has reshuffled its strategic agenda. One of the core pillars is the ambition to focus purely on its frozen food arm, a business which exports among others frozen vegetables and fruit to more than 40 countries worldwide. The strategy made its potato division, which has an estimated capacity of 85,000 tons per year, redundant, prompting the firm to put the division up for sale.

Last week, H2 Equity Partners announced that it has found a new owner for the potato division: Lamb Weston / Meijer, a potato specialist player with five production facilities in Europe (three in The Netherlands, one in the United Kingdom and one in Austria). The company, which operates as the Europe, Middle East, Africa (EMEA) arm of publicly listed Lamb Weston (headquartered in Eagle / 6,000 employees worldwide), provides restaurants and retailers in over 100 countries with frozen potato, sweet potato, appetizer and vegetable products.

Lamb Weston / Meijer buys potato division of Oerlemans Foods

As part of the transaction, which is expected to be completed later this year, all 700 employees of Oerlemans Foods will transfer to Lamb Weston / Meijer, taking its headcount to a total of circa 2,000. The deal also includes a take-over of Oerlemans Foods’ plant in Broekhuizenvorst, which will add 185 million pounds of production capacity to Lamb-Weston/Meijer’s network, and will provide opportunities for further expansion.

Strategic fit at both sides of the table

The move marks, according to Lamb Weston’s CEO Tom Werner, a great fit with its strategy, as the US-based company responds to the increasing demand for frozen potato products. Analysis from Euromonitor released in 2016 showed that worldwide demand for frozen french fries continues to increase, with demand set to grow to 2.6 billion pounds by 2020. “This strategic acquisition is consistent with our investments to strengthen our position in the global industry, and to better support the increasing demand for frozen potato products and growth ambitions of our customers in Europe and abroad”, Werner remarks.

Last year Lamb Weston, founded in 1950 as a family business, spun-off from ConAgra Foods** in a bid to better serve the market and realise its ambitions. “As an independent, pure play company, we’re better able to sharpen our focus on what we do best to create shareholder value over the long term”, said Werner back in November 2016. Since, the company has significantly expanded its footprint in the US: investing more than $200 million to enlarge its facility in Richland, Washington, and $30 million to enhance its facility in Boardman, Oregon. 

The EMEA arm followed suit with a major investment in Russia, striking a joint venture with Belaya Dacha – the partners have agreed to invest €100 million in a local potato factory (capacity of 90,000 tons per year) aimed at serving the fast growing Russian market. Bas Albas, CEO of Kruiningen headquartered Lamb Weston / Meijer, highlights that, besides the expansion potential, the operations of both firms are complementary to each other. “The diverse customer base of Oerlemans Foods’ potato division and the location of its factory in Broekhuizenvorst, makes this a strategic asset to further shape the ambitions of our customers.” 

MA advisors Lamb Weston - Meijer | Oerlemans Foods

For Oerlemans Foods, the sale of the potato division aligns with its strategic choice to focus solely on the frozen fresh fruit and vegetables market. The firm has stipulated a growth strategy, which includes growing its market share in domestic markets in Northwest Europe and Poland, as well as further extending its global reach through entering new markets. 


The deal – financial details have not been disclosed – was supported by merger & acquisition experts from four firms. Buyer Lamb Weston / Meijer received M&A advisory from Squarefield, an Amsterdam based corporate finance boutique, while legal support was provided by the Dutch arm of global law firm Simmons & Simmons. Sell side M&A support was provided by Stamford Partners, a London based investment banking firm, and Houthoff Buruma, a Netherlands based law firm. 

* Oerlemans Foods was since 2007 part of VION, a Netherlands headquartered food conglomerate with global revenues of €6.5 billion. Following VION’s decision to divest several non-core businesses, including Oerlemans Foods, a search process was launched for the unit in 2013. After a deal with Dutch vegetable specialist Baltussen broke down in November that year, H2 Equity Partners successfully closed the transaction in March 2014.

** ConAgra Foods, $7.2 billion company, last year separated into two independent public companies: one focused on FMCG food brands (Conagra Brands) and another focused on frozen potato products (Lamb Weston).


8 tips for successfully buying or selling a distressed business

18 April 2019

Embarking on the sale of a business is one of the most challenging experiences a management team can undertake. Even serial dealmakers acknowledge that the transaction process can be gruelling, exposing management to a level of scrutiny and challenge through due diligence that can be distinctly uncomfortable.

So, to embark on a sale process when a business is in distress is twice as challenging. While management is urgently trying to keep the business afloat, they are simultaneously required to prepare it for scrutiny by potential acquirers. Tim Wainwright, an experienced Transactions Partner with Eight Advisory, says that this dual requirement means sellers of distressed businesses must focus on presenting their business in a way that supports buyers in identifying value, whilst simultaneously being open about the causes of distress. 

According to Wainwright, sellers of distressed businesses should focus on eight key aspects to ensure they are as well prepared as possible:

  • Cash: In a distressed situation cash truly is king. Accurate forecasting and day-by-day cash balances are often required to ensure any buyer is confident that scarce cash reserves are under proper control. 
  • Equity story and turnaround plan: Any buyer is going to want to understand the proposed turnaround strategy: how is the business going to enact its recovery and what value can be created that means the distressed business is worth saving? Clear presentation of this strategy is essential.
  • The business model: Clear demonstration of how the business model generates cash is required, with analysis that shows how financial performance will respond to key changes – whether these are positive improvements (e.g., increases in revenue) or emerging risks that further damage the business.  Demonstrating the business is resilient enough to cope with these changes can go a long way to assuring investors there is a viable future.
  • Management team: As outlined above, this is a challenging process. The management team are in it together and need to be consistent in presenting the turnaround. Above all, the team needs to be open about the underlying causes that resulted in the distressed situation arising.  A defensive management team who fail to acknowledge root causes of distress are unlikely to resolve the situation.

8 tips for successfully buying or selling a distressed business

  • Financing: More than in any traditional transaction, distressed businesses need to understand the impact on working capital. The distressed situation frequently results in costs rising as credit insurance becomes more difficult to obtain or as customers and suppliers reduce credit. Understanding how these unwind will be important to the potential investors.
  • Employees: Any restructuring programme can be difficult for employees. Maintaining open communications and respecting the need for consultation is the basic requirement. In successful turnarounds, employees are often deeply engaged in designing and developing solutions. Demonstrating a supportive, flexible employee base can often support the sale process.
  • Structuring: Understanding how to structure the business for the proposed acquisition can add significant value. Where possible, asset sales may be preferred, enabling buyers to move forward with limited liabilities. However, impacts on customers, employees and other stakeholders need to be considered.
  • Off balance sheet assets: In the course of selling a distressed business, additional attention is often given to communicating the value of items that may not be fully valued in the financial statements. Brands, intellectual property and historic tax losses are all examples of items that may be of significant value to a purchaser. Highlighting these aspects can make an acquisition more appealing.

“These eight focus areas can help to sell a distressed business and are important in reaching a successful outcome, but it should be noted that it will remain a challenging process,” Wainwright explains. 

With recent studies indicating that the valuation of distressed business is trending north. With increased appetite from buyers who are accustomed to taking on these situations, it is likely that more distressed deals will be seen in the coming months. “Preparing management teams as best as possible for delivering these will be key to ensuring these businesses can pass on to new owners who can hopefully drive the restructuring required to see these succeed,” Wainwright added.