Oatly Group AB (Nasdaq: OTLY) and Ya YA Foods, one of North America’s largest co-packers, announce a long-term strategic hybrid partnership.
“We look forward to working with Oatly and supporting their transition to a more asset-light model”
Through the agreement, Oatly will continue to produce its proprietary oat base at both its Ogden, UT and Fort Worth, TX facilities, which will then be transferred to Ya YA Foods to be co-packed into Oatly products on-site at each location.
Under the terms, Oatly will retain full ownership and operation of proprietary oat base production lines in each facility, while Ya YA Foods will acquire a majority of the assets, including mixing and filling equipment, and assume the property lease at Oatly’s production facility in Ogden. Ya YA will also assume responsibility for the completion of construction of the production facility and the lease in Fort Worth.
Oatly will receive approximately $72 million through the agreement, plus an additional credit towards future use of shared assets related to the Ogden facility. The transaction is expected to close in the first quarter of 2023.
Supporting growth
“We are excited to partner with Ya YA Foods, a leading food and beverage manufacturer who brings deep production expertise and shares our commitment to meeting the highest quality product and safety standards,” commented Toni Petersson, Oatly’s CEO.
Petersson added, “We believe an increased focus on our oat base technology, innovation, branding and commercial execution will better position Oatly to drive profitable growth, while reducing the capital intensity of our future facilities, and ultimately convert more consumers to plant-based and create more products that are healthy for people and the planet.”
According to Oatly, the announcement is part of the company’s shift towards an asset-light supply chain to better support its growth, capacity needs and product formulations. It expects the partnership to result in future capital expenditure savings while having a net positive effect on its cash flow outlook.
“Significant” expertise
Founded in 2008, Ya YA Foods is a leading co-packer specializing in aseptic food and beverage production.
“We look forward to working with Oatly and supporting their transition to a more asset-light model, allowing them to leverage our significant expertise in aseptic beverage packaging,” said Yahya Abbas, CEO of Ya YA Foods. “We are pleased that Oatly recognizes our top-tier food safety track record and unique capabilities and has confidence in our ability to meet their high standards. The two properties we are acquiring will increase our geographic profile and scale, allowing us to serve the vast majority of the United States and Canada. This highly strategic partnership with Oatly is a key step towards achieving our goal of becoming the leading aseptic beverage co-manufacturer in North America.”
