Milcobel to sell ice cream maker YSCO, focus on dairy portfolio

Citing a ‘fast-growing but highly-fragmented market’, Milcobel announced it intends to sell its ice cream subsidiary YSCO for an undisclosed sum, subject to approval.

The buyer is hedge fund management firm Davidson Kempner Capital Management (DKCM) and food and pharma investor Afendis Capital Management Limited as an operating partner. DKCM invests in a variety of credit and equity strategies plus real assets, in both public and private markets.

YSCO is the second largest private label ice cream company; it has production plants in France and Belgium and distributes around 190 million liters of ice cream per year, mostly within Europe, and works closely with most major retailers on creating and producing own-brand ice cream products.

However, while Europe’s private label ice cream market has a growth rate of 5% CAGR in recent years and is expected to grow further according to Milcobel, the sector is also highly fragmented, which warrants additional capital and focus to drive growth.

The Belgian dairy co-op says that part of the transaction ‘will flow back’ to its circa 2,000 member dairies and ‘create room for targeted investments in additional capacity and process optimization. De-leveraging would also result in lower financial charges, with a likely positive effect on the milk price, said the co-op.

“Under Milcobel's ownership, YSCO has grown into a major player in the European private label ice cream market,” commented Peter Grugeon, CEO of Milcobel.

“If the transaction is approved, we are confident that Davidson Kempner and Afendis will provide the focus and capital needed to accelerate YSCO's further growth and enable it to seize opportunities in a dynamic and consolidating ice cream market.

“The proceeds of this transaction would benefit our member dairy farmers and would enable us to continue to build on the value of our diary activities and partnerships, and to focus on our consumer cheese business and our premium dairy ingredients.”

In addition to its ice cream division, Milcobel operates a consumer products and dairy ingredients arms. Under the consumer arm, the co-op produces around 20 million kg of Belgian cheese per year, both under its own brands such as Brugge Cheese and Nazareth Cheese or for private-label applications. The co-op also imports, processes and markets more than 2,000 types of cheese through Dupont Cheese.

Milcobel also markets dairy ingredients including cheese, milk powders, butter, cream and whey powder.