Sweden-based AAK is selling its US foodservice facility in Hillside, New Jersey, to Stratas Foods, which supplies fats, oils, mayonnaise, dressings and sauces to the foodservice, food ingredients and retail private label markets in North America.
The deal is expected to generate a “one-time positive cash flow impact” of nearly SEK 600 million (US$56.7 million) at closing, with no anticipated material effect on the profit and loss statement, says the firm.
AAK is also planning to invest nearly SEK 400 million (US$37.8 million) in its European foodservice expansion, spread over 2025-2026. The move will focus on strengthening its presence in the UK and Nordic regions.
“In line with our strategy, we are optimizing our foodservice business by focusing on Europe, where we see critical mass and growth potential. As part of this shift, we will divest the Hillside plant while strengthening our European presence by investing in a new facility in Sweden to replace the existing site in Dalby,” says Johan Westman, president and CEO of AAK.
“Additionally, we are enhancing and modernizing our Hastings Foodservice site in the UK. These strategic investments will improve operational efficiency and position AAK for future growth in the foodservice sector.”
Stratas Foods and AAK have signed a binding transaction agreement and the sale is expected to be finalized before the end of the year, depending on customary closing conditions. Until then, Hillside will continue to be reported as part of AAK’s food ingredients segment.
AAK’s interim report for the third quarter 2024 reported an increase in operating profit in its food ingredients business by 4% to SEK 770 million (US$72.8 million).
Transaction impact
AAK says its Hillside facility represents nearly 5% of AAK’s total volumes and contributes around 1% to its operating profit. Its divestment is expected to positively impact the company’s operating profit by approximately 4% per kilo, all else being equal.
For Stratas Foods, the acquisition is expected to support the expansion of its footprint and capabilities in the Northeast, says the company’s CEO, Erik Heggen.
“Along with our Englewood, NJ site, AAK Hillside fortifies a robust platform that empowers us to grow with our customers today and well into the future.”
AAK recently discussed the growing trend of cookie dunking and how oils and fats affect the biscuit and cookie behavior in a webinar with Food Ingredients First. Specialty fats can be tailored to create desirable textures, form crunch and softness and improve the overall sensory experience while dunking, the company previously told us.
By Insha Naureen
Source: foodingredientsfirst.com
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