On Wednesday, Marel announced an agreement to acquire Wenger Mfg. LLC, a global leader in processing solutions focused on pet food, plant-based proteins and aqua feed, for $540 million, closing during the second quarter 2022.
The acquisition of Wenger is a platform investment into new, complementary and attractive growth markets for Marel and will form the fourth business segment alongside poultry, meat and fish.
"Wenger is a true leader in its field of providing solutions and services to the pet food industry 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 in the center point of the value chain," says Arni Oddur Thordarson, CEO of Marel.
"This platform acquisition will add the fourth business segment to our business model, where we are a global leader in processing solutions, services and software."
The fourth pillar
A new business segment, based on the Wenger platform, will constitute Marel’s fourth pillar alongside poultry, meat and fish, and will be focused on the sizeable growth markets of pet food, plant-based proteins and aqua feed.
On a pro-forma basis, this new business segment will account for around 10% of Marel’s total revenues and 12% of combined EBITDA.
This new growth platform is an important addition to Marel’s product portfolio to meet customers’ rising demand for high-quality food and feed that is processed in a sustainable and affordable way.
The two companies have a great strategic and cultural fit with highly complementary product portfolios and geographic presence, creating a strong platform to enhance further growth.
"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," says Thordarson.
Trevor Angell, chairman of the board of directors for Wenger, says his company enjoys a diversified and loyal customer base ranging from blue-chip pet food processors to startup companies in plant-based proteins, which has resulted in healthy profitability, strong cash flow and solid return on invested capital.
Capitalizing on Marel’s global reach and digital platform, the two companies are well positioned to explore future growth opportunities together, says Angell.
"During our interaction, it was apparent that there is great strategic and cultural alignment between Wenger and Marel," he says.
"Our shared values and vision, our care for customers and employees, and the combined technical strengths of the two companies will create tremendous value in global food production.”
Growth platform into new and attractive growth markets
The global pet food and aqua feed markets are estimated at over EUR 100 billion and EUR 50 billion respectively and growing at 5% to 6% annually. The plant-based protein market is currently around EUR 7 billion and expected to grow 15% to 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% to 6%, in line with Marel’s long-term market growth expectations.
Marel says it aims to grow faster than the market, based on its continuous innovation and global reach.
Throughout the years, Marel has gradually expanded its playing field and is now the only pure-play provider of full-line solutions, software, and services to the poultry, meat, and fish industries.
In the vision solidified in 2016, the scope was widened from the three animal proteins to focus more generally on transforming food processing. In 2020, Marel announced an increased focus on adjacent markets and in 2021 it formally established a business development division focused on pet food and plant-based proteins.
"Adding Wenger’s strong capabilities in that area, Marel is accelerating its journey and is well positioned to capitalize on providing transformational solutions to the large and attractive growth markets of pet food, plant-based proteins and aqua feed," says Thordarson.
Marel sees great opportunities and is committed to invest in the combined business to accelerate growth. The acquisition is expected to be margin and earnings enhancing.
Planned initiatives include expanding manufacturing capacity to respond to high demand in Wenger’s core markets. Aftermarket revenues represent over 40% of Wenger’s revenues, and Marel’s global reach and digital platform will support a more proactive aftermarket approach to better service customers around the world.
