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INTERVIEW: Arvesta Looks at Next Steps for Palital and Aveve Biochem

Source: Feedindo Logo Final

19 February 2021 - In early January, Arvesta (formerly known as Group Aveve) announced its intent to acquire all remaining shares (70%) of Palital, a specialist manufacturer of various types of butyrates (calcium, sodium and magnesium butyrate), protected urea, as well as flavouring agents and sweeteners. The full ownership announcement followed Arvesta’s April 2020 announcement stating it would acquire an initial 30% stake in Palital.

Palital was founded in 2009 as a joint venture between Palion B.V. and Bewital GmbH & Co. KG. The company is based in Velddriel, the Netherlands, and has about 40 employees. Its annual turnover amounts to EUR 12 million. And counting Aveve Biochem (the feed additives arm of Arvesta which was established in 1998), Arvesta expects the units to realise a combined annual turnover of EUR 20 million.

Under Arvesta ownership, Palital continues to operate independently in its daily operations and the current management of Palital remains in place. Today, however, the companies are in the process of working how the partnership between Palital and Aveve Biochem can be reinforced.

One immediate observation is that Arvesta has new in-house feed additive production facilities as Palital operates its own manufacturing plant, whereas Aveve Biochem has no production facilities. The proximity of both Palital’s and Aveve Biochem’s locations is also favourable.

All parties involved are in agreement that future growth opportunities will come from the complementarity identified between Palital's products and Aveve Biochem's range of enzymes, essential oils and mid-chain fatty acids, and that the collaboration with Arvesta will enable both units to build international presence faster in the field of feed additives and specialties and grow the Arvesta brand.

Dirk Van Thielen
Business Unit Director Animal Nutrition

“There are a lot of complementarities in terms of the product portfolio,” Dirk Van Thielen, Business Unit Director Animal Nutrition at Arvesta, told Feedinfo.

“Aveve Biochem is specialist in enzymes and medium chain fatty acids, while Palital is specialist in butyrates. Together with Palital, we will be able to expand our gut health product range and cover the ruminant market with protected urea and magnesium butyrate products.”

Van Thielen added that Palital and Aveve Biochem will use each other's distributor networks to expand sales opportunities. For example, Aveve Biochem is strong in China, Palital not as much. In contrast Palital is more active in South and North America.

For Van Thielen, acquiring Palital was a key strategic development, and the long-term growth agenda is clear.

“We want to be the specialist in a limited range of feed additives (enzymes, etc.) and want to excel in these specific segments worldwide. It is our strategy to become the absolute market leader in butyrates,” he said.

“We have a strong ambition to increase our commercial presence via the synergies in the distributor network, to continue to grow strongly organically and keep an eye on potentially new M&A projects that would fit our strategy.”

Looking specifically at the butyrates segment, part of Arvesta’s vision is to achieve production cost leadership, which the company claims will be possible with the recent launch of a patent protected magnesium butyrate, seen to help improve dairy cow health and increase milk production.

Palital doubled its production capacity of butyrates in January 2017 as demand for butyrate as a feed additive is increasing worldwide thanks to its ‘clean label’ and sustainability credentials, and to its contribution to reduce the use of antibiotics in animal feed.

Although Van Thielen did not wish to disclose current butyrate production capacities at the Velddriel site, he did however state that the company is preparing for a capacity increase of both butyrates and protected urea.

And despite the relative setbacks that were the COVID-19 pandemic and African Swine Fever (ASF), which caused, in Van Thielen’s words, a “difficult market situation”, he is convinced that the butyrates market will continue to grow.

Commenting on ASF, he said: “It looks like China is quickly restocking its pig operations which will offer new opportunities, in spite of tough local competition.”

“The acquisition of Palital has also given us novel products,” he went on to say. “A strong point of Palital is that they are always looking to develop new products and strive for continuous improvement of existing products.”

Van Thielen also explained that Arvesta started with a 30% stake acquisition of Palital in April 2020, with the intention to acquire a 100% stake over time. The remaining 70% shares were eventually acquired in January 2021, only 8 months later. This came down to the realisation that many synergies existed between both companies and were applicable from an early stage.

It became increasingly obvious for all stakeholders to move forward quickly.

“With a 30% participation we could only exploit a number of synergies in sales,” Van Thielen said.

“With a 100% takeover we can utilise all synergies and we can go full for 100% cooperation.”