Spanish company Ebro Foods will gain a foothold in the UK market through the acquisition

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Image: Ebro Foods’ factory in Seville, Spain. Photo: Courtesy of Ebro Foods, S.A.

American food company Hain Celestial Group has completed the sale of its Tilda rice brand to Ebro Foods for $342m (£283m).

Tilda is an internationally reputed rice brand, primarily offering basmati rice and is present in several countries across five continents, with particular importance in the UK market.

The brand has two plants in Rainham (UK), with a workforce of 326 employees. Its net sales in last year up to this June were £152.6m, 60% of which were in the UK and 92% representing basmati rice.

The purchase price is 13.5 times the adjusted earnings before interests, taxes, depreciation and amortisation (EBITDA), based on the fiscal year 2019.

Hain Celestial will pay down its debt through the sale proceeds

Hain Celestial plans to use a portion of the proceeds from the sale to pay down its debt and is also evaluating distribution alternatives for the remainder to maximise shareholders’ value.

Tilda is expected to contribute nearly $200m (£165m) in net sales and $25m (£20m) in adjusted EBITDA for the fiscal year ending June 30, 2019.

Hain Celestial president and CEO Mark Schiller said: “We are pleased to complete the strategic sale of Tilda, which is consistent with our transformational plan to simplify our portfolio, strengthen our core capabilities and expand margins and cash flow.

“Tilda has been a strong business for us, primarily in the United Kingdom, and under new strategic ownership, we expect the brand to continue to thrive. We believe this transaction represents a significant premium to a majority of other European food and global rice and pasta industry transactions over the last several years.

“In addition, this divestiture will enable us to reduce our exposure to marketplace disruption associated with the uncertainty of Brexit and additional future potential foreign currency fluctuations.”

The acquisition of Tilda brand will enhance Ebro’s portfolio in the premium rice sector and will also help the Spanish food processing company in gaining a foothold in the British market, where till now it has only a token presence.

Additionally, Ebro opines that Tilda’s international nature will pave the way to develop its other group products extensively.