Kalt in talks with European and North American cheesemaking equipment targets – sponsor

28 July 2020 - 04:10 am UTC

by Min Ho in London

Kalt Maschinenbau, the Swiss cheesemaking process technology specialist, is in talks with two targets in Europe and North America, Antonio Cives, partner of the company’s sponsor CGS Management, said.


Talks are in early stages and negotiations with its North American counterpart have been made more difficult due to the inability to travel and hold direct talks with owners during the current pandemic crisis, Cives said. 


The cheesemaking equipment manufacturer has local networks of contacts in both geographies to help with the negotiations, he said, without commenting on whether advisors will be appointed. It is, however, keen to hear from advisors who could introduce new potential targets as part of its push to broaden its product range and international presence, especially in the US, he said.


The Lütisburg-headquartered company, with revenues of around CHF 35m-40m (EUR 33m-37m), is seeking manufacturers with products that are complementary to its core competency of cheese vats, presses and brine bath production.


Equipment manufacturers for hard and semi-hard cheeses such as Tête de Moine or Emmentaler, which Kalt is strong in, are of interest. Similarly, equipment manufacturers specialised in other hard and semi-hard cheese production, such as cheddar, where it does not yet have a foothold, will also be considered, Cives said.


It will not enter the soft cheese market, such as mozzarella and brie, for the time being, he said.


Targets specialising in robotics and other processing technologies that can be plugged into its existing capability in cheese production, from curd portioning, pressing, acidifying, to de-moulding and finally clean-in-place cleaning, are of interest, he said.


Europe is “by far” the biggest market for Kalt, especially Austria, Switzerland and, to a lesser extent, Germany. This is followed by North America, where it has a limited presence via US subsidiaries of Swiss cheese producers, he said.


As American cheese producers typically buy from American equipment manufacturers, acquiring an American platform will ideally give Kalt an existing infrastructure with customers to expand from, he added. In Europe, it is keen to expand in other large cheese-eating markets, such as the Netherlands, Eastern Europe, Russia, and Nordics, he said.


CGS Management typically seeks bolt-on targets for its platform companies of CHF 10m to CHF 30m in revenue and profitable margins, Cives said. In EBITDA terms, targets generating between CHF 1m and CHF 4m are ideal, he added.


The complementary nature of a target, however, is more important than the size criteria.


CGS Management acquired Kalt Maschinenbau last month from its previous owners, the Winkler family, and now forms part of its CHF 240m CGS IV fund. The transaction details were undisclosed.


Kalt competes with Switzerland-headquartered Tetra Pak, Germany’s GEA and Alpma, as well as France-based Chalon Megard. It also competes with several local middle-sized companies in Europe, North America and a small number of Asian players, which are generally not as developed except in India, he said. It is the number two player in the global market for hard and semi-hard cheese, he claimed.


Kalt operates in a “relatively niche” cheese equipment manufacturing market worth around EUR 500m to EUR 600m per year, he added.


The company has a team of six sales managers in Switzerland and one in France. Its sales can grow internationally either through the use of its internal local sales managers or it can consider working with distributors in markets it wants to expand in, he added.