Brexit driving UK food business acquisitions
Conversely, it has been cited as one of the main reasons for the strong number of deals carried out in the sector in a newly published report.
According to Simon Peacock, director at Catalyst Corporate Finance, nine deals involving food businesses have been completed in the first quarter of 2018, seven of which involve trade buyers and two led by a UK financial investor.
He explained why UK food businesses are proving so popular. “Establishing a UK footprint or investing in a trusted UK food and drink brand is being viewed as a way to ward off potential tariffs that could be imposed on EU imports for trade,” said Peacock. “For private equity and private owners, healthy businesses in the sector are now being seen as strong bets for continued growth despite Britain’s impending departure from the EU.”
Peacock also highlighted some of the major food business deals performed during the first quarter of the year:
Meridian sold to SHS
“Meridian has grown rapidly in recent years on the back of the explosion of interest in nut butter. This is due to the product being seen as more of a protein snack than a traditional spread and its subsequent health-conscious marketing. Sales soared by 57% in 2017 and it was exactly this sort of growth that initially attracted private equity investors, valuing the business at around £40m. However, once Irish family-owned SHS stepped in, with its portfolio of well-known drinks and ambient brands, pricing quickly rose. It is rumoured that the business ultimately sold for around £50m, which represents an impressive double-digit EBITDA multiple.”
Freshcuts sold to Perwyn private equity
“Freshcuts, a fast-growing fresh ingredients supplier sold a majority stake to Perwyn private equity, the US-financed evergreen family office fund. Freshcuts provides cooked and raw fruit and vegetables for pizza toppings and a wide variety of ready meals to retailers and on-trend foodservice outlets. Having invested over £1.2m in a second new facility in Nottingham and achieved 33% growth in its pre-tax profits, the business attracted a range of private equity investors.”
Total Produce buys stake in Dole Foods
“Total Produce sees this as a transformational deal, putting it in a leading position in an industry that has had a number of challenges. As retailers such as Asda/IPL have sought to go direct to growers, the wholesalers have found margins squeezed through increased competition and rising input costs from currency and labour. This mega-deal shows that Total Produce and Dole clearly both recognise the benefits of consolidating.”
Aryzta sell Signature Flatbreads
“Having sold the naan and tortilla business to Aryzta for £80m back in the 2015, the Eid family continued to stay involved in what became a 50:50 joint venture. While ethnic breads have shown significant growth, replacing more traditional bread formats, Aryzta has been selling off non-core assets to focus on its core strategy and particularly its frozen B2B operations. Despite the Eid family thinking the Signature business was ‘too big’ back in 2015, it now has the benefit of better systems and infrastructure and the circumstances were right for the business to return to its family ownership.”
