RPT-RLPC-Darling buys Vion’s ingredients unit for 1.6 billion euros‑Reuters

(Reuters) – U.S.-based food business Darling International is to buy Dutch meat producer Vion‘s ingredients division for 1.6 billion euros ($2.18 billion), according to a company statement on Monday, in a blow to private equity firms bidding for the unit.

Darling won a competitive auction to buy the business after Dutch agricultural and horticultural association ZLTO put the company up for sale earlier this year.

Bank of America Merrill Lynch was hired earlier this year to advise on the sale of Vion, which had a price tag of 1.4 billion euros to 2 billion euros.
The sale attracted interest from private equity firms Advent, Apollo, CVC and Permira as well as German trade buyer Saria and private equity firms.

Darling is financing the transaction through a combination of bank debt, public debt and equity and was advised by JP Morgan. JP Morgan, Goldman Sachs and BMO Capital Markets provided committed financing to support the deal.

The sale to a strategic trade buyer is a big loss to the leveraged loan market, which is suffering from a shortage of loans after low levels of M&A in 2013 to date.

Bankers had been working on debt financings of around 1 billion euros, consisting of leveraged loans and high-yield bonds in euros and dollars.
The 1 billion euro debt financing was equivalent to around 5 times Vion ingredients’ earnings before interest, taxes, depreciation and amortisation (EBITDA) of around 200 million euros.

Vion Ingredients is headquartered in the Netherlands. It employs 6,000 staff and produces gelatine, proteins and fats from slaughterhouse byproducts which are then sold to the pharmaceutical, cosmetics, food, feed, energy and technology sectors, according to Vion’s website.

The deal is expected to close in January 2014 subject to regulatory approval.