In a statement recently released, Lamb Weston Holdings said it had reached an agreement to buy the remaining equity stakes in its European joint venture with Meijer Frozen Foods B.V. for EUR700 million in cash and Lamb Weston common stock.

“Lamb-Weston/Meijer was built over the last 28 years, and we’re grateful to Meijer Frozen Foods for their longstanding partnership. The joint venture has served as a strong platform to drive growth in Europe and the Middle East, as well as to support our global customer base across our key international markets. This transaction firmly aligns with Lamb Weston’s long-term capital allocation and acquisition framework, and we believe it will strengthen our manufacturing footprint by leveraging a truly global supply chain to better serve our customers and position us to take advantage of growth opportunities in Europe, the Middle East, and Africa,” Tom Werner, President, and CEO of Lamb Weston said.

The management of Meijer Frozen Foods declared that it is proud of the company they have built together to create a market leader in Europe, according to Kees Meijer, the company’s CEO.

“We remain confident in the long-term outlook for Lamb Weston and the global frozen potato category. By holding an investment in the common stock of Lamb Weston after the transaction closes, we sustain our strong belief in a bright future for the business,” Meijer added.

Upon completion of the transaction, Lamb Weston will own 100% of Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), formerly operated as a 50/50 joint venture between a wholly-owned subsidiary of Lamb Weston and Meijer Frozen Foods.

Lamb Weston will pay a transaction consideration of EUR700m, comprised of EUR525m in cash and EUR175 million of Lamb Weston’s common stock. The Company anticipates closing the transaction in the second half of fiscal 2023, subject to regulatory approvals. The Company expects to fund the cash portion of the acquisition with new borrowings and cash on hand. Lamb Weston’s targeted long-term net leverage range1 of 3.5x to 4.0x remains unchanged.

Lamb-Weston/Meijer is one of the leading suppliers of frozen potato products in Europe, the Middle East, and Africa, with approximately EUR954 million in net sales in fiscal 2022 (including EUR114 million of net sales from its former joint venture in Russia).

The transaction will give the Company ownership of an additional five manufacturing facilities worldwide, including four facilities in the Netherlands and one in the United Kingdom, as well as a sixth manufacturing facility through a 75% interest in a joint venture in Austria. These facilities produce nearly two billion pounds (910,000 MT) of finished frozen products annually. In addition, upon completion of the transaction, the former joint venture’s approximately 1,500 employees will become employees of Lamb Weston.

As a 50% owner of Lamb-Weston/Meijer, the Company recorded its 50% portion of earnings in Equity Method Investment Earnings in its financial statements. As of the transaction closing, Lamb-Weston/Meijer will be a wholly-owned subsidiary of the Company, and the Company will fully consolidate Lamb-Weston/Meijer’s results in its financial statements.

Goldman Sachs is acting as financial advisor to Lamb Weston in connection with this transaction.