Dawn Foods acquired Royal Steensma

Stem op deze deal via de stempagina: https://mena.nl/genomineerden-best-mid-cap-deal-2024/

Name of the deal: Dawn Foods acquires Royal Steensma
Date announced: 31 January 2024
Date closed: 31 January 2024
Published value: EUR 100-200m
Buyer(s): Dawn Foods
Target(s): Royal Steensma
Seller: Shareholder of Royal Steensma

Involved firms and advisors

Involved firms and advisors buy side:
Accuracy, Simmons & Simmons, JSA Tax, Tauw

Involved firms and advisors target: –

Involved firms and advisors sell side:
Squarefield, Houthoff

Pitch

Brief description deal / Deal outline
Global bakery manufacturer and ingredients supplier Dawn Foods acquired Royal Steensma, a renowned family-owned bakery ingredients manufacturing company headquartered in Leeuwarden, The Netherlands. Royal Steensma has a broad bakery product portfolio and specializes in fat-based coatings (Souplesse), almond and confectionary pastes, bakery mixes, fruit fillings, as well as infused and candied fruits and decorations. Royal Steensma has been a leader in the bakery market for almost 185 years. The acquisition includes four manufacturing plants in The Netherlands, a manufacturing facility in Thailand, and continued involvement with the Food Innovation Academy (FIA) education center in The Netherlands.

About Dawn Foods
Founded in 1920 and headquartered in Jackson, Michigan, Dawn Foods is a leading global manufacturer of bakery ingredients. As a family-owned business, it operates across North America, Europe, and Asia, providing a diverse range of products, including bakery mixes, frostings, fillings, and frozen goods. Committed to quality and innovation, Dawn Foods focuses on developing tailored solutions that meet the evolving demands of artisanal bakers, retailers, and food service providers. With a strong emphasis on sustainability, the company actively invests in research and development to create healthier and more sustainable products.

Dawn Foods has recently expanded its global footprint through strategic acquisitions, including the purchase of Royal Steensma, enhancing its capabilities in the European market. Dedicated to community engagement, Dawn Foods supports various local initiatives and educational programs, ensuring a positive impact on the communities it serves. With a rich legacy and a forward-thinking approach, Dawn Foods continues to thrive as a key player in the global bakery industry.

About Royal Steensma
Founded in 1837 and headquartered in Rotterdam, Netherlands, Royal Steensma is a leading manufacturer of bakery ingredients and solutions. As a family-owned business with over 185 years of experience, it specializes in high-quality baking mixes, fats, and custom formulations tailored to the needs of artisanal bakers and food manufacturers. Renowned for its commitment to quality, Royal Steensma employs stringent quality control measures and sources premium ingredients to ensure consistent performance. The company emphasizes innovation by investing in research and development to create products that cater to evolving market trends, including healthier options and sustainable practices. With a rich legacy and a focus on customer needs, Royal Steensma continues to thrive as a vital player in the European bakery industry.

Why should this deal win the Award for Best Deal Mid-Cap 2024?
The recent acquisition of Royal Steensma by US-based Dawn Foods stands out as a pivotal moment in the Dutch ingredients business landscape. From Royal Steensma’s perspective, this strategic move represents not only a merger of two family-owned bakery heritage companies but also a gateway to global growth and enhanced opportunities.

On February 6, 2024, Dawn Foods, a global bakery manufacturer and ingredients supplier, proudly announced its acquisition of Royal Steensma, a renowned family-owned bakery ingredients manufacturing company headquartered in Leeuwarden, The Netherlands. For nearly 185 years, Royal Steensma has been a leader in the bakery market, specializing in fat-based coatings (Souplesse), almond and confectionary pastes, bakery mixes, fruit fillings, and infused and candied fruits and decorations. The acquisition includes four manufacturing plants in The Netherlands (Leeuwarden, Franeker, Vlaardingen, and Elst), a manufacturing facility in Thailand, and brand-new education center, called the Food Innovation Academy (FIA) in The Netherlands.

From Royal Steensma’s perspective, the acquisition opens up a world of possibilities. By joining forces with Dawn Foods, Royal Steensma gains access to a global distribution platform. Dawn Foods’ extensive network spans more than 100 countries, connecting with over 50,000 artisanal and retail bakers, food service leaders, and manufacturers. This global reach means that Royal Steensma’s high-quality bakery ingredients can now find their way to new markets, reaching bakers and consumers far beyond the Dutch borders. The synergy between the two companies ensures that Royal Steensma’s products will inspire and delight bakers worldwide, reinforcing their commitment to excellence and innovation.

Dawn Foods’ forward-thinking vision extends beyond distribution. The acquisition signals a strategic shift in their European production footprint. As Dawn Foods restructures its European footprint, significant volumes of production will be redirected to Royal Steensma’s three production facilities in The Netherlands—Vlaardingen, Franeker, and Leeuwarden. In order to realize this foodprint rationalization, dozens of expert sessions have taken place to truly work out a detailed integration plan post completion. This infusion of activity translates into a boon for employment within Royal Steensma. New opportunities will emerge for skilled workers, technicians, and administrative staff. The Dutch workforce will witness a surge in job creation, fostering economic growth and stability. Royal Steensma’s commitment to its employees remains unwavering, and this acquisition reinforces that promise.

The Food Innovation Academy (FIA) is poised to play an even more critical role in Royal Steensma’s future strategy. As part of the acquisition, Royal Steensma’s continued involvement with the FIA education center aligns seamlessly with Dawn Foods’ vision. The FIA serves as a hub for culinary innovation, research, and education, fostering collaboration between industry experts, students, and professionals. By leveraging the FIA’s resources, Royal Steensma can enhance its product development, explore cutting-edge techniques, and stay at the forefront of bakery trends. The FIA’s emphasis on knowledge exchange and practical application perfectly complements Dawn Foods’ commitment to excellence.

In the Netherlands’ mid-market M&A landscape, the Dawn Foods-Royal Steensma acquisition represents a perfect example of future collaboration, growth, and shared values. Royal Steensma will embrace global access, employment opportunities, and the preservation of their rich heritage, whilst offering the opportunity to realize its global aspirations.

Deal rationale
Both Royal Steensma and Dawn Foods will benefit from unlimited cross-sell potential due to the full complementarity of their product portfolios and geographical market presence. Dawn Foods will leverage Royal Steensma’s leading position in the Benelux, while simultaneously opening up numerous new export markets for Royal Steensma around the world. Additionally, Dawn Foods plans to restructure its European manufacturing footprint, fully utilizing Royal Steensma’s production capabilities, which will create significant cost synergies.

The rationale behind this deal is to leverage the established positions of both companies in the bakery market. Dawn Foods’ vast global reach, combined with Royal Steensma’s stronghold in the European bakery ingredients sector, will allow both companies to diversify their market presence. Through the acquisition of Royal Steensma, Dawn Foods will gain access to four manufacturing plants in the Netherlands and one in Thailand, significantly expanding its production capacity. For Royal Steensma, this transaction provides access to Dawn Foods’ global distribution network, fostering synergies that enhance product innovation and market competitiveness.

What is the impact of this deal for the company?
This deal will open up many new markets for Royal Steensma, especially in the US and LATAM, as they become part of an absolute global powerhouse in bakery ingredients. Furthermore, due to the enormous inflow of new volumes in Royal Steensma’s facilities, a significant rise in employment is to be expected. This acquisition marks a milestone point for both companies, as Dawn Foods gains an increased foothold in the European market, bolstering its leadership in the global bakery industry. The integration of Royal Steensma’s product portfolio will enable Dawn Foods to offer an expanded range of innovative ingredients that cater to the evolving demands of artisanal bakers, retailers, and distributors worldwide.

For Royal Steensma, becoming part of the Dawn Foods family guarantees a stable future for its business, employees, and customers, securing the continuity of the Steensma brand and its 185-year-old legacy while providing access to a broader range of resources and expertise. The transition allows Royal Steensma to innovate and grow in an increasingly competitive market, with its leadership in product quality and creativity preserved and amplified within Dawn Foods’ global framework.

What is the impact of this deal for the direct stakeholders?
Management will become part of a globally leading franchise, whereas customers will enjoy a much broader product portfolio and suppliers will face larger volume demand. For employees of both companies, the acquisition brings substantial benefits, as Dawn Foods has committed to retaining all of Royal Steensma’s 310 employees, ensuring job security and providing new opportunities for professional growth within a larger international organization.

The acquisition aligns with both companies’ values as family-owned enterprises, maintaining a culture of respect and commitment to employees. Customers of both Royal Steensma and Dawn Foods will benefit from the wider range of product offerings and enhanced production capabilities. The combined expertise of both companies enables the creation of tailored solutions for customers in artisanal bakeries, retail, and food service industries, helping them meet consumer demands more effectively. The shared focus on innovation will allow for the development of new products that respond to market trends, such as the demand for healthier ingredients or more sustainable sourcing practices.

What is the impact of this deal on society?
Given the enormous inflow of additional volumes to the Dutch facilities of Royal Steensma resulting from the European production footprint rationalization of Dawn Foods, a significant rise in employment will benefit the Friesland province as well as the Rotterdam/Vlaardingen area. This acquisition also has broader societal implications. By expanding Dawn Foods’ reach into new markets and leveraging Royal Steensma’s experience with local supply chains and educational initiatives like the Food Innovation Academy (FIA), the transaction promotes sustainable growth and innovation in the bakery industry.

Both companies are committed to sustainability and quality, with Royal Steensma’s involvement in FIA ensuring continued investment in food technology education, nurturing the next generation of bakers and food innovators. Additionally, the deal addresses one of the most pressing challenges facing the food industry today: inflation and raw material cost volatility. By combining their expertise and economies of scale, both companies can more effectively manage these challenges, providing stability in product pricing and supply for their customers, which in turn benefits end consumers.

What was most complex about this deal?
Managing the future integration post-transaction, specifically integrating the European business of Dawn Foods into the existing Royal Steensma facilities, posed significant challenges. Investments needed to be made, and attracting a sufficiently skilled labor force to accommodate this integration was crucial. This has led to dozens of (operational) expert sessions to create a suitable joint plan for effective implementation immediately post-closing.

Furthermore, one of the primary challenges faced was the volatile economic environment, particularly the impact of rising raw material prices and inflation. For a food ingredients company, fluctuations in the cost of key raw materials such as almonds, sugar, and fruit can significantly affect profitability and operational efficiency. Both Dawn Foods and Royal Steensma needed to carefully assess how to mitigate these risks and ensure the deal would be viable for the long term.

Additionally, aligning the operations of two companies with distinct production facilities across multiple geographies posed logistical and integration challenges. With manufacturing plants in both the Netherlands and Thailand, integrating supply chains, technology, and organizational structures required meticulous planning and execution to ensure a smooth transition. Lastly, cultural alignment played a key role in this deal. Both Dawn Foods and Royal Steensma are family-owned businesses with deep-rooted traditions, so maintaining the entrepreneurial spirit and customer-centric values of Royal Steensma while transitioning into a global corporation like Dawn Foods required careful management of both internal and external stakeholders.