Turkey's Yildiz takes the Biscuit

By bne IntelliNews November 4, 2014

David O'Byrne in Istanbul -


Turkey's leading confectionary and biscuit maker Yildiz Holding has made another big international foray by agreeing to buy UK-based biscuit and snack maker United Biscuits. The family behind Yildiz have strong ties to Turkey's leading Islamist politicians and the president's Justice and Development Party (AKP), but their company has an international flavour to it.

The deal, which if completed would make Yildiz the world's third biggest biscuit manufacturer, was realised through a competitive bidding process with US-based Kellogg and Canadian pension fund, Ontario Teachers. Yildiz has not confirmed the sale price, although media reports have suggested that the sellers, US private equity consortium Blackstone Group and PAI Partners, had been in talks over a price of around $3bn.

In a statement confirming the purchase, Yildiz said that the acquisition is in line with its strategy of international diversification, and complements its existing confectionary and food manufacturing businesses.

Yildiz's main Turkish manufacturing arm, the 70-year-old Ulker Biskuvi Sanayi group, is Turkey's biggest biscuit and snack manufacturer, and already distributes its products to 85 countries, giving it a strong presence in North America, China, Japan and the Middle East & North Africa region, and has manufacturing operations in six countries including Saudi Arabia and Egypt. In recent years Yildiz has expanded from biscuits and chocolate into beverages, margarine and dairy products, as well as frozen and other convenience foods.

According to Yildiz, its operations complement well United Biscuits' strong presence in Europe and the UK. “The addition of United Biscuits’ market-leading portfolio of brands will further strengthen Yildiz Holding’s position as a leading global consumer goods group, combining two highly complementary geographical footprints and opening significant opportunities for further growth," said Yildiz chairman Murat Ulker. "We want to grow United Biscuits to be a global player as part of Yildiz. This will include enhancing its position in the UK, where Yildiz currently has minimal presence."

United Biscuits is not Yildiz group's first major foreign purchase. In early 2008 the group bought upmarket Belgian chocolate manufacturer Godiva for $850mn, since when it has succeeded in growing the brand in both Europe and the US, raising revenues from $49mn in 2008 to an anticipated $769mn this year and with plans to exceed $1bn in 2016.

That purchase raised eyebrows, not just because it is a rare example of a Turkish company buying a global consumer brand and making a success of it, but also because of Yildiz's long-standing reputation as a conservative Turkish company with strong Islamic values – not a prime candidate to buy a manufacturer of luxury liqueur chocolates. Yildiz's purchase of Turkish supermarket chain Sok in 2013 was swiftly followed by the disappearance of alcohol from the chain's shelves, for example.

Similarly, Yildiz still holds an 11% stake in Islamic finance house Turkiye Finans, and both the Ulker family and its companies have long and close relations with Turkey's leading Islamist politicians.


Yildiz chairman Murat Ulker himself was in the same class at the prestigious Istanbul boys' school, Istanbul Erkek Lisesi, as current Turkish prime minister Ahmet Davutoglu, while the family of current Turkish president, former prime Minister Tayyip Erdogan, have long been shareholders in businesses distributing Ulker products.

Such contacts did not go down well with Turkey's former secular elite, with the Turkish military for many years being widely reported to have boycotted products produced by Ulker and other Yildiz subsidiaries.

Despite this, in an interview in October 2013 Murat Ulker denied that his companies were "conservative" in their operations, pointing to its success with the Godiva brand. And Yildiz's internet site makes great play of the company's commitments to the values of Turkey's secular republic, with its social activities including sponsorship of sports and arts projects for children, and continuing support for turkey's main environmental charity TEMA, which it helped found.

On the corporate side too, Yildiz differs from many traditional family run Turkish companies. Although headed by family head Murat Ulker, the company's five-man board also includes former Eastman Kodak and Black & Decker executive Jim Zaza as Group President for Corporate Strategy, Global Marketing, International Operations and Beverage; and MIT-educated Cem Karakas, a former senior executive at Turkey's fiercely secular military pension fund Oyak. While at Oyak, Karakas was instrumental in the group's purchase of Turkish steel producer Erdemir and his experience of M&A is believed to have played a significant role in Yildiz continuing purchasing spree.

This broader outlook has been noticeable especially in Yildiz's main Turkish operation, Ulker Biskuvi Sanayi. Although long-established as one of Turkey's biggest food companies, Ulker until about five years ago enjoyed little interest from international investors, explains Irem Okutgen, the food and beverage analyst at Istanbul brokerage Garanti Yatirim. "The structure of their operations was unwieldy and not so transparent, and especially foreign investors found them confusing," she says, explaining that this changed after the company brought in international consultants. "Ulker's share price jumped from between two to three lira in 2010 to TRY17.5 today." 


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