ABF purchase of Dorset Cereals benefits both – analyst
ABF confirmed on June 5 it had clinched a deal to buy Dorset Cereals from Wellness Foods. The transaction is reportedly worth £50M. Shore Capital analyst Darren Shirley told FoodManufacture.co.uk it would definitely be a boost for the Dorset Cereals brand.
“ABF is one of the best owners in the industry – look at what it has done with Patak’s and Jordans. It buys good businesses and in general keeps manufacturing teams in place.”
The company has confirmed its intention to maintain Dorset Cereal’s existing manufacturing base in Poundbury, Dorset.
Patak’s
The Patak’s founding family sold the company to ABF for more than £100M in 2007. The company integrated Patak’s product ranges, together with its Blue Dragon ethnic foods brand into a World Foods division in 2008.
ABF also bought into Jordans in 2007, then combined that with its Ryvita brand to form the Jordans And Ryvita Company, which ABF had a controlling stake in, the following year. In November last year, Jordans reported pre-tax profits up 18% in that business, to £274M. It is that subsidiary that has now purchased Dorset Cereals.
Premium end of category
Shirley said that Dorset Cereals was positioned at the premium end of the breakfast cereal category, commanding a high price point and ABF had some expertise in that area with other products. “ABF has some experience of that already with its Twinings tea brand.”
He believed ABF had the financial clout for some time to make the purchase, which is still subject to regulatory approval, but had not done so until now simply because the opportunity had not arisen. “ABF has got a very strong balance sheet,” he added. “Cash has never been a constraint.”
