Credit crunch, weak dollar pave way for Ülker to Godiva
Posted by meb at December 29th, 2007
Atilla Kurama, the CEO of Yıldız Holding — owner of the Ülker Group, which purchased luxury chocolatier Godiva for $850 million last week — said the recent credit crunch and the appreciation of the Turkish lira against the dollar had worked to his company’s advantage during negotiations for Campbell Soup Company’s sale of Godiva, despite many competitors including food giants Hershey, Mars, Nestle and Lindt and several giant private equity houses that hunt for worldwide brands.
Yıldız Holding held a press conference on Thursday evening in İstanbul to inform press about the Godiva acquisition process. During the conference Kurama highlighted that Godiva’s acquisition by a Turkish firm had been covered widely in many US and world newspapers. He noted, however, that the most surprising aspect of the media coverage was that just two hours after the sale’s announcement, the following note was posted to Internet site Wikipedia: “Campbell announced that it entered into an agreement to sell Godiva to İstanbul, Turkey, based Yıldız Holding which also owns Ülker, for $850 million.”
Kurama said their idea to purchase Godiva was born in the summer of 2007 when they caught wind of rumors that Campbell was going to sell the subsidiary. The rumors turned out to be true; on Aug. 6, Campbell officially put Godiva up for sale, saying that it did not fit with their overall strategy of focusing on simple meals like soup. Yıldız Holding took the necessary steps and announced their interest in the company, Kurama said, adding that Campbell first asked them, “Who are you? We don’t know your company that well …” He said, however, that Yıldız Holding was well prepared for the bid and worked with consultants and attorneys. “We conveyed a brilliant and efficient image,” Kurama said, pointing out that they passed the first phase in the sale tender.
Kurama said that at that time, Godiva was priced at between $1.2 billion and $1.5 billion. But two things happened, he said, that “changed the tender’s destiny.” The first he cites as the financial market credit crunch stemming from the US subprime mortgage crisis, causing rival finance houses to retract their bids; the second, Kurama said, was the appreciation of the Turkish lira against the dollar. “Then we made the binding agreement on Dec. 11 and finished the job by completing the deal on Dec. 20,” he said.
Godiva: a precious jewel for Ülker
Kurama said that during the negotiations they met with the Godiva board and were told: “We were not expecting you as a contender; we were thinking Nestle, Starbucks or Mars would complete the purchase. Why do you want to buy Godiva?” Yıldız Holding Chairman Murat Ülker then told the board members that he was already running a company worth $7.5 billion that had enough business — but that Godiva was like the Kaşıkçı Diamond (a precious 86-carat, pear-shaped diamond on exhibit at Topkapı Palace in İstanbul) for him. He said that he would not do anything to hurt the company but would preserve it by at most polishing it and promoting it in unknown markets, said Kurama. “No one had explained Godiva better than you. Only you think about Godiva the same way we do; and that’s why we are pleased you are going to buy Godiva,” Kurama quoted a board member as saying.
In response to a question about when Godiva would launch its first boutique in İstanbul, Kurama said Yıldız Holding considers Godiva a stand-alone company and that Godiva CEO Jim Goldman was driving it. However, Kurama said Goldman had told him that İstanbul would be one of the first places they would open a branch after the handover process. “I think it will not take so long to see a Godiva in İstanbul,” Kurama said.
Asked whether the sale price was too high, Kurama said the cost of the sale would be around $110 million below the current figure for them, as there would be some tax advantages at yearend.
In response to another question about the reaction of Sabri Ülker, the founder of Ülker Group and Murat Ülker’s father, to the acquisition deal, Kurama said he did not know, but knew how Ahsen Ülker, Sabri Ülker’s daughter, had reacted. “I am really pleased that you bought it. In the past, sometimes I really wanted to buy Godiva chocolates during my travels but my father had never allowed me to, saying we have better chocolates than that. But now I can buy them freely,” Kuraman quoted as Ahsen Ülker saying.
Born in Belgium, moved to USA
Godiva was founded in 1926 in Brussels by Joseph Draps. He named his chocolate company after Lady Godiva, a beautiful noblewoman married to the Earl of Mercia 10 centuries ago.
According to legend, she took pity on the people of Coventry who were suffering under her husband’s oppressive taxation. He said he would remit the taxes if she rode naked through the town — which, according to legend, she did. The first Godiva shop outside Belgium was opened in Paris in 1958 on the upscale market street Rue du Faubourg St-Honoré. In 1966, Godiva made its North American debut at Wanamaker’s in Philadelphia.
In the same year, a controlling interest in the company was sold to Campbell, which later acquired the rest of the company.
Godiva then expanded to Asia, with the first chocolates becoming available in Japan in central Tokyo in 1972. In 1998, the first Godiva store in Hong Kong opened and it is now also present in Taiwan and Singapore.
Godiva sells gourmet coffees, truffles and fancy chocolates. An 8-ounce, milk-chocolate snowman goes for $13 while 12 monthly shipments of chocolate cost $350, according to Godiva’s Web site.
Ülker is a major Turkish manufacturer of food products that are exported internationally to 78 countries. The company’s core products are cookies, crackers and chocolates, although Ülker received the “Candy Company of the Year in Europe” award from the European Candy Kettle Club in 2004. Ülker’s sales totaled $ 7.43 billion in 2006.
source: Today’s Zaman
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