How McCain Foods became the preferred buyer of Lutosa

Last week McCain Foods and PinguinLutosa announced an agreement on the sale of the PinguinLutosa potato division.

The Belgian Newspaper "De Standaard" reveals how McCain Foods ended up the preferred buyer instead of Conagra Foods Lamb Weston.

Weeks earlier "De Standaard" was among the Belgian Newspapers who announced that Conagra Foods Lamb Weston was the buyer of the potato division, clearly citing knowledgeable sources involved in the process.

Here is their latest account on what happened, published tuesday (in Dutch). Turns out it was all about guarantees on investments in Lutosa:

Early September a bidding war seemed to develop between a number of buyers interested in the Lutosa potato division.

According to "de Standaard" McCain Foods initially approached PinguinLutosa with a proposal to buy the potato unit. This created unrest in the sector, triggering additional proposals of both Conagra Foods and Farm Frites. Interestingly, this article does not mention Aviko, which at the time also was widely reported to have made an offer.

Since substantial amounts were offered, the board of PinguinLutosa decided to take a closer look at the offers. It soon became clear the choice was between Lamb Weston and McCain Foods. PinguinLutosa offered Lamb Weston the opportunity to exclusively negotiate a deal for a certain period.

In a press release dated September 5, PinguinLutosa spoke of a bid, without naming the bidder and expressed the expectation that by the end of September an agreement would be signed. The bid was based on a company value of 225 million euros, an impressive price compared to the market value of PinguinLutosa.

Mid September, trade unions got involved and expressed concerns regarding the production facility in Sint-Eloois-Vijve, the smaller of the two production facilities of Lutosa, where 165 people are employed, versus 500 at the main facility in Leuze.

The September deadline passed and last friday the announcement came that an agreement with McCain was reached.

Lamb Weston did not finalize the deal "Because it would not give any guarantees on investment" says a source, according to De Standaard.

PinguinLutosa returned to the first bidder, McCain Foods, who was willing to take over the company on the same terms as Lamb Weston, but with investment guarantees.

Hein Deprez, the main shareholder of PinguinLutosa said monday: "We have sold to the party that offered the best employment prospects"