AMSTERDAM: Sausage skin maker Devro has moved to strengthen its presence in Europe by agreeing a deal to buy a Dutch rival for up to €13.5 million (£9.7m).
The Moodiesburn-based firm said PV Industries (PVI), a maker of collagen gel products for the meat processing industry, offers it access to “a strong technical skills base together with an innovative and developing product portfolio”.
City analysts said the deal – a rare acquisition for Devro – was seen as “fitting like a glove” as the firm has found it hard to break into the European market for collagen gels, which are used to coat sausages and offer a cheaper alternative to making hot dogs than cellulose.
Devro, led by chief executive Peter Page, employs about 2,200 people around the world. Last year the firm announced it would shed 130 out of 520 jobs in Bellshill and Moodiesburn as part of a plan to save £5m a year as it ramps up production overseas. It is spending £50m on a plant in China and investing £40m to expand its US manufacturing presence.
Costs linked to the shake-up in production on home turf and the overseas expansion saw the company’s pre-tax profits tumble to £2.2m last year, down from £37.5m in 2013. However, a recent trading update highlighted that sales volumes have shown year-on-year growth for four quarters running, helped by strong performances across China, Germany, Japan and the US.
Currency continues to be a headwind against prior year, but the board remains confident in the outlook for 2015,” the firm told investors at the time of its annual meeting in April.
Devro, which generates 11 per cent of its sales in the UK and Ireland, with a further 35 per cent coming from the rest of Europe, is paying about €12.5m for PVI, with a possible additional payment of up to €1m under an earn-out arrangement.
