Wise Move

Published in CSP Daily News

Arca strengthens its snack business with two acquisitions

MONTERREY, Mexico -- Arca Continental SAB de CV, the second-largest Coca-Cola bottler in Mexico and Latin America, has announced the acquisitions of snack food companies Wise Foods, Berwick, Pa., and Industrias Alimenticias Ecuatorianas in Ecuador.

Terms of the transactions were not disclosed.

Wise Foods was purchased from affiliates of New York-based private investment firm Palladium Equity Partners LLC, which acquired Wise in 2000. This transaction is still subject to customary regulatory approvals, which are expected to be obtained promptly.

Both Wise Foods and Inalecsa have well-recognized salty and sweet snack brands in their respective markets.

The investment in this important sector strengthens the company's presence in both regions and expands its snack business, which operates in Mexico under the brand Bokados, the third-largest in the country.

The combination of these two companies with our current snack operations will result in net sales of close to $400 million in 2013.

Over its 90-year history, Wise Foods is a pioneer in the potato chip and salty snack segments and has enjoyed excellent consumer loyalty, allowing it to compete successfully with larger national snack companies, said Arca.

Wise is a leading regional salty snack brand with strong core market and national expansion potential. The company has a particularly strong presence in the New York Metropolitan market where Wise is the No. 1 regional brand and No. 2 overall brand, said Arca.

Wise Foods' products are distributed via a system of independent distributors and five company-owned distributor branches. It has approximately 850 employees and produces nearly 40,000 tons per year.

The acquisition of Wise will greatly expand Arca's current operations and strengthen marketing capabilities in its related businesses in the United States., where the company has been operating for more than 25 years, primarily in Texas and California, through its affiliate Interex.

Inalecsa started operations in Ecuador in 1972 and is a leading company in its industry, with a wide national footprint as well as exports to Europe. The company is known for its salty, sweet and savory snacks, with leading brands such as Inacake, Tigreton, Tortolines, Riskos and Tornaditos.

"The integration of Wise Foods and Inalecsa reinforces our confidence in this segment of the snack industry as an important vehicle for creating value for our shareholders, in areas that are highly complementary to our core business," stated Manuel L. Barragan Morales, chairman of Arca.

"These transactions also increase our company's presence and competitiveness in both markets, thereby enabling us to develop new growth opportunities in the territories we serve. Both provide a solid platform that will bring innovation to our portfolio, product and brand expansion as well as beneficial synergies and the sharing of best practices," said Francisco Garza-Egloff, CEO of Arca.