Bell Food Group to divest sausage business in Germany

Switzerland-based meat processor Bell Food has announced plans to divest its German sausage business to Zur Mühlen Group.

Financial details of the deal have not been disclosed.

Following the divestiture of its sausage business, Bell Food intends to focus on expansion in the air-dried ham segment.

As per the terms of the deal, Zur Mühlen Group has agreed to absorb 400 employees working at the Bell Food’s Suhl and Börger facilities.

Completion of the deal is subject to the approval of relevant competition authorities.

According to Bell Food Group, the divestiture of the sausage business would impact jobs in administration and central services departments at Bell Germany.

The divestment is expected to reduce net revenue by nearly Sfr85m ($87m). The sale of the German sausage business is expected to create a positive impact on the Bell Food Group’s cash flow and earnings before interest and taxes (EBIT) of Sfr10m ($10.3m) per year from 2020.

According to the Swiss company, the retail market for meat and sausages in Germany is declining due to oversupply to the market.

Due to tough competition, it was not viable for the firm to pass on the sharp rise in the price of pork prices.

The divestment will incur mostly non-cash one-off costs of around Sfr35m ($36m) in the financial year of 2019.