Dhe pretzel stands of the Ditsch bakery chain are part of the inventory of many German train stations. The oven-fresh crunchy pretzels are a good help when you’re hungry in the train compartment. It is named after the master baker Wilhelm Ditsch, who founded the business more than a hundred years ago as a “bakery for pretzels and pretzels” in Mainz. His son Heinz Ditsch rationalized the production of the pretzel blanks and began to set up a network of sales stands in the 1980s. Because of the oversupply of small bakeries in Mainz, he had previously decided to mainly offer pretzel products. In 1990 Peter Ditsch, the grandson of the founder, took over sole management of Ditsch GmbH. With him, the history of the expansion-seeking bakery as a family business ended: in 2012, Ditsch sold the business, which now has more than 190 sales outlets, to the Swiss retail group Valora. In return, he became Valora’s largest single shareholder with a 17 percent stake.
But now Peter Ditsch is getting out completely. He serves his shares to the Mexican retail group Fomento Económico Mexicano (FEMSA). On Tuesday, FEMSA submitted a cash offer to acquire all shares in the publicly traded Valora Holding AG. The Mexicans are offering 260 francs per share, which corresponds to a premium of 57.3 percent over the volume-weighted average price of the last 60 trading days and 52 percent over the closing price of Valora shares on July 4, 2022. According to FEMSA, it intends to finance the entire purchase price of up to CHF 1.1 billion from available cash.
Stock price shoots up
Not only the major shareholder Peter Ditsch, for whom the sale of the shares brings in around 190 million Swiss francs, agrees with the offer. According to a statement, the Board of Directors of Valora is also unanimously in favor of accepting the takeover bid. If at least two-thirds of all shares are tendered to FEMSA by September, nothing will stand in the way of the transaction. On Tuesday, the Valora share price shot up by 51 percent to CHF 258.50, almost reaching the level of the offered price.
After numerous acquisitions, there are now numerous retail chains under the Valora umbrella, which last year generated sales of 2.2 billion francs and earnings before taxes and interest of 30 million francs with 15,000 employees. In addition to Ditsch, the group also includes the German chain Backwerk, Back-Factory, Brezelkönig and the chains K-Kiosk, Press & Books, Avec, Caffè Spettacolo and its own brand Ok.
Listed on the stock exchanges in Mexico and New York, FEMSA has more than 320,000 employees and annual sales of $27 billion. Of that, $15 billion is in retail operations, so far concentrated in Latin America. The group is also the largest franchise bottler for Coca-Cola products and the second-largest shareholder of the Heineken Group. FEMSA CEO Daniel Rodriguez wants Valora and its operating subsidiaries to continue to work independently. This takeover is not about leveraging synergies and cutting costs. “This is a growth story,” Rodriguez said at a press conference in Zurich. You need every single employee and want to help Valora to continue or accelerate the growth course in Europe.
According to Rodriguez, Valora’s headquarters in Muttenz near Basel will be retained. The prospective owner also intends to retain management under the leadership of Michael Müller. Müller himself approved of the takeover: Valora can benefit from FEMSA’s resources and extensive experience as a leading retail company. Since the presence of the two groups does not overlap geographically, no job losses are to be expected. “Instead, the two companies assume that the targeted growth in Europe will create a significant number of new, attractive jobs in Switzerland and other European countries.”