The Kraft Heinz Company (KHC) has inked a deal to snap up an 85% stake in Germany-based Just Spices GmbH, while the remaining 15% stake will be retained by Just Spices’ three founders. The financial terms of the deal were kept under wraps.
Following the news, shares of the American food company rose 2% to close at $34.15 on Friday.
Launched in 2014, Just Spices, an innovative start-up, records annual sales of about €60 million. With over 170 products, Just Spices’ flourishing spice revolution business sells around 70% of its ready-made and one-step spice blends directly to consumers. The remainder is sold by major grocery retailers both in-store and online in Germany, Spain, Austria, and Switzerland.
According to Kraft Heinz, Just Spices’ data-driven product innovation successfully caters to the needs of Gen Y and Gen Z consumers.
Benefits of the Acquisition
Through the acquisition, Kraft Heinz’s international growth strategy focused on taste elevation will be enhanced. The acquisition is likely to conclude in the first quarter of 2022, subject to customary closing conditions, including merger control approval.
International Zone President at Kraft Heinz, Rafael Oliveira, said, “This is a great opportunity to further accelerate our growth agenda by strengthening our ability to anticipate trends in consumer tastes and preferences, as well as our speed to innovate.”
“We will leverage our scale and agility to accelerate Just Spices’ business in the fast-growing taste elevation market beyond its current German base and its recent market entries in Spain, Austria, and Switzerland. We also see tremendous potential to strengthen and enhance our own direct-to-consumer operations and go-to-market expansion,” Oliveira added. (See Kraft Heinz stock charts on TipRanks)
Recently, Guggenheim analyst Laurent Grandet downgraded Kraft Heinz to a Hold from a Buy and decreased the price target to $33 (3.37% downside potential) from $46.
Grandet said that following the company’s strategic plan and its divestment from commoditized Planters and the Kraft Cheese businesses a year ago, he was “too optimistic” when he upgraded the shares.
Overall, the stock has a Hold consensus rating based on 5 unanimous Holds. The average Kraft Heinz price target of $38.20 implies 11.86% upside potential to current levels. Shares have fallen 20.3% over the past six months.