Mondelez disposes European brands to disposal experts Eurazeo

On March 31, Mondelez officially announced the sale of a number of local European brands to French-based private equity investors Eurazeo. In keeping with the Mondelez “journey” into permanent restructuring and accelerated asset sales to fund dividends, the share price, and executive compensation, the announcement should come as no surprise.

The deal will transfer production of these brands to five plants in France (Marcq-en-Baroeul, Blois, Saint-Genest, Vichy, and Strasbourg) to be owned and operated by Eurazeo. Current production of these brands in Spain and Central Europe will be transferred to the new company in France.

The Mondelez factory in Valladolid, Spain will close, with the elimination of 232 jobs.

Mondelez claim that Eurazeo is an “active, long-term investor” The record shows that they are a financial investor with a business model based on debt-funded acquisitions and a rapid ‘disposal cycle’.

Eurazeo is not a food company, and doesn’t claim to be – their business is built on a compressed cycle of acquisition, often funded by large quantities of debt, and divestment. On their web site, Eurazeo describes sales of their acquired companies in terms of their “advanced disposal program”.

None of the companies that have gone through their disposal cycle and which they cite in support of their “proven long standing track record in managing and developing leading brands” are food companies. Their acquisitions and disposals  range from pure financial operations through non-financial companies in diverse areas including car rental and parking services, surgical instruments and construction.

Long- term investors? Eurazeo acquired French construction materials maker Terreal in 2003, together with private equity investors Carlyle and Eurazeo exited its investment  in 2007. In 2005, Eurazeo acquired the satellite communications company Eutelsat as part of a consortium of private equity investors. In 2007, they sold their share in the company. Eurazeo bought the B&B Hotels chain in 2005; they exited in 2010, a relatively long holding period no doubt stemming from the depressed state of the global economy during those years. The disposal cycle is anything but long. And many of the companies that have passed through their cycle have continued to struggle with their ongoing burden of debt.

Read the whole story in the latest IUF Mondelez Union Network – download and distribute!