Marel has successfully closed the USD 540 million acquisition of Wenger Manufacturing LLC, a global leader in processing solutions for the high growth markets of pet food, plant-based proteins, and aqua feed. The agreement to acquire Wenger, as announced on 27 April 2022, was subject to customary closing conditions which have been fully satisfied as of 9 June, such as anti-trust and approval from Wenger’s shareholders.
This new platform investment is an important market entry into new and attractive growth markets where Wenger’s industry-leading extrusion and dryer technologies forms the anchor point in a new segment in Marel’s business model. Wenger shares Marel’s passion for innovation and commitment to best-in-class products, backed by an experienced team, and long-standing partnerships with customers, ranging from blue-chip pet food processors to startup companies in plant-based proteins. This has resulted in Wenger’s healthy profitability with an EBIT margin of 14-15%, strong cash flow and solid return on invested capital.
On a pro-forma basis, this new business segment accounts for around 10% of Marel’s total revenues and 12% of combined EBITDA. Over 60% of Wenger’s revenues derive from pet food where the company has a global leading position within their focus market segments. They have a strong foothold in the North American market and over 40% of revenues come from services. Wenger’s revenues have organically grown approximately 5% in 2017-2021, and revenues in 2022 are expected to be USD 190 million, EBITDA to be USD 32-35 million.
The new segment will be run on a standalone basis, reporting to Arni Sigurdsson, Chief Strategy Officer and EVP of Strategic Business Units. As of Q3 2022, this new platform will become part of Marel’s segment reporting alongside the poultry, meat and fish business segments.
Sizeable and attractive growth markets
There are immediate opportunities for growth and value creation by leveraging Marel’s global reach and digital platforms in Wenger’s sizable and attractive markets. The global petfood and aqua feed markets are estimated at over EUR 100 billion and EUR 50 billion respectively and growing at 5-6% annually. The plant-based protein market is currently around EUR 7 billion and expected to grow 15-20% annually.
The addressable market for Marel and Wenger in solutions and services within pet food, plant-based proteins, and aqua feed is estimated to be around EUR 2 billion with expected annual growth of 4-6%, in line with Marel’s long-term market growth expectations.
Wenger is a true leader in its field of providing solutions and services to the pet food and aqua feed industries and has in recent years made its mark on the fast-growing plant-based protein consumer market with best-in-class solutions positioned right at the center point of the value chain.
The two companies have complementary technologies and product portfolios that will strengthen the value proposition with line solutions for processors of plant-based protein. Wenger’s industry-leading extrusion and dryer technologies are a strong anchor point in the value chain that defines the texture and quality of the end product. Marel’s highly complementary product portfolio will then add technologies such as weighing, sorting, inspection, low-pressure forming and thermal treatment, all aimed at ensuring high-nutrition products that are processed in a safe and sustainable way.
Marel is committed to invest in the combined business to drive commercial synergies and accelerate growth. Planned initiatives include expanding manufacturing capacity to respond to high demand in Wenger’s core markets, in particular pet food. Marel’s global reach and digital platform will support a more proactive aftermarket approach to better service customers around the world and utilize customer relationships to cross sell the combined portfolio.