Strategic divestment of AAK’s US Hillside site paves way for European re-investment
AAK's divestment of its Hillside US site, will see re-investment in its European business, including Hastings site (pictured). Pic: AAK
Global ingredients group AAK has entered into an agreement to divest its Foodservice facility in Hillside, NJ, USA, as part of wider strategic re-investment put at SEK 400 million (34 million Euros) into its international operations, reports Neill Barston.
As the Swedish-headquartered company explained to Confectionery Production, the move relates to its key decision to optimise its business, which will see major enhancement of its European divisions, including strengthening existing presence in the UK and Nordic regions.
Significantly, AAK Foodservice manufactures over 300 specialty products, including oils, condiments, sauces, dressings, frying oils, and ingredients. Following the divestment of Hillside, AAK now operates three segment facilities worldwide—Runcorn and Hastings in the UK, and Dalby in Sweden—collectively accounting for around 5percent of the group’s total production volume. Once completed, the new site will replace the existing site in Dalby.
Notably, the transaction is expected to generate a one-time positive cash flow impact of approximately SEK 600 million at closing, with no anticipated material effect on the profit and loss statement. Hillside represents approximately 5 percent of AAK’s total volumes and contributes around 1 percent to its operating profit. As a result, the divestment is expected to positively impact the group’s operating profit per kilo by approximately 4 percent, all else being equal.
As part of its plans, it is set to improve and modernise its Hastings Foodservice site in the UK. The total capital investment for the European Foodservice expansion is approximately SEK 400 million, spread over 2025-2026. These investments will further strengthen our competitiveness in the UK and northern Europe.
Johan Westman, President and CEO, believed the move would prove particularly positive as the business continues to grow. He said: “In line with our strategy, we are optimising our Foodservice business by focusing on Europe, where we see critical mass and growth potential. As part of this shift, we will divest the Hillside plant while strengthening our European presence by investing in a new facility in Sweden to replace the existing site in Dalby. Additionally, we are enhancing and modernising our Hastings Foodservice site in the UK. These strategic investments will improve operational efficiency and position AAK for future growth in the Foodservice sector.”
Erik Heggen, CEO Stratas Foods, LLC, added: “The acquisition of AAK Hillside underscores our commitment to expanding our footprint and capabilities in the Northeast. Along with our Englewood, NJ site, AAK Hillside fortifies a robust platform that empowers us to grow with our customers today and well into the future. At Stratas, our Team is focused on re-defining what is possible to help our customers thrive. Together, our Hillside and Englewood locations are poised to deliver unparalleled value to our customers and stakeholders alike.”
