GEA targets Asian growth with New Zealand acquisition

GEA Group has reached an agreement to acquire a New Zealand-based powder specialist as part of its ongoing strategy to expand in the emerging Asian markets and compete with rivals.

The Germany-based giant announced it had taken over Nu-Con, a major global supplier of powder handling components, complete powder handling systems and bulk filling lines.

Nu-Con, based in Auckland, has 167 employees and posted revenues of €27m in the financial year ending 31 March, 2011. Its powder handling systems are used mainly in the infant formula, dairy and other food processing sectors.

The new company would be called GEA Nu-Con.

Eyeing Asian growth

The New Zealand company has a strong presence in South East Asia, with plants in Singapore and Australia as well as offices in Malaysia. It also has agency relationships in Japan, Indonesia, the Philippines, India, Chile, the Netherlands and Brazil.

GEA spokesman Marc Ponitz said that its share in Asian markets was a major factor behind purchasing the firm.

“Nu-Con has a strong market reputation in South East Asia, especially in dairy and particularly in China,” he said. ‘We see China as the main market over the coming years.”

GEA executive board member Niels Graugaard hailed the move as a key piece in the strategy to position the company correctly in the bulk powder handling market.

"Nu-Con fits perfectly into our product and location matrix and strengthens our powder business especially in the growing Asian markets,” he said.

Rival interest

GEA said it expects to complete the buyout in September this year subject to approval from competition authorities.

In it submission to the New Zealand Commerce Commission, the company said the acquisition would not significantly reduce competition in the New Zealand market. It added it would “continue to face strong competition from Tetra Pak and Powder Projects”.

Citing average five-year market data, the German firm said that Tetra Pak would still be of equivalent size to GEA/Nu-Con post-acquisition.

“While in the last two years GEA has had greater market share than Tetra Pak, the position can change quickly based on the outcome of tenders,” said GEA.

The German company stated Nu-Con was also a takeover target for a major rival as it sought to bolster its case in favour of the buyout.

“Most likely the acquirer will be a multinational company based outside New Zealand,” said the company. “Nu-Con will be best placed to expand on this.”

Source: GEA Group