The venture – named SOHI Meat Solutions – will see Hilton work alongside Sonae to redevelop the production facilities of its packing and sourcing subsidiary Sonae Centro Processamento Carnes.
The redevelopment work is due to be completed by the second quarter of 2017 and is expected to cost £18.7M (€22M), to be financed by the joint venture partners. Hilton has stated that its part of the investment will be financed “primarily from debt”.
SOHI is to supply products to Sonae’s grocery stores across Portugal. The partners believed the joint venture would lead to an increase in overall volumes supplied to the Portuguese market.
‘Exciting growth opportunity’
Hilton ceo Robert Watson said: “We are very pleased that this exciting growth opportunity has advanced to a joint venture with Sonae Modelo Continente.
“Our progress in Portugal demonstrates further the strength of Hilton’s flexible and versatile business model, enabling us to meet the local requirements of our customers in their territories.”
The partnership with Sonae extended Hilton’s global presence to 15 countries, according to Watson. The company would continue to look for further opportunities for geographic expansion.
Hilton announced in July that it expected its supply agreement with Sonae would lead to signing a joint venture.
City analyst Shore Capital’s Clive Black and Darren Shirley said the joint venture had expanded and broadened Hilton’s growth potential, as well as reduced its dependency and risk profile over the years.
‘Expect further additions’
“Hilton now operates in 15 markets, including Sonae – which is a real achievement to our minds – and we would expect further additions in time.
“With plenty of fuel in the tank for growth to come, we welcome this announcement from Hilton and look forward to finessing our forecasts once we have spoken to management.”
Sonae Modelo Continente commercial director Eunice Silva said he was pleased that the partnership with Hilton had progressed to a full joint venture agreement in Portugal.
“It will enable us to strengthen the leadership position of Continente further in the development of innovation and the sustainable promotion of the agro-food business in Portugal,” added Silva.
Sonae has more than 1,200 stores and has a market share of 22%. It operates a multi-format portfolio of stores, including hypermarkets, supermarkets and convenience stores.