Fox’s Biscuits eyed up for potential merger deal

By James Ridler contact

- Last updated on GMT

The rumoured Towerbrook acquisition of Fox's would be the first step in a new major player in European biscuits
The rumoured Towerbrook acquisition of Fox's would be the first step in a new major player in European biscuits

Related tags: Ambient, Finance

Private equity firm Towerbrook has reportedly set its sights on acquiring 2 Sisters-owned Fox’s Biscuits as part of a mega merger to create a new European biscuit business.

The private equity firm has made moves to acquire both Biscuit International (BI) – which has a portfolio including Northumbrian Fine Foods, reportedly the UK’s largest gluten-free biscuit manufacturer – and Fox’s Biscuits in a bid to create a powerful player in the European sector, claimed Sky News.

Rollits corporate finance director Julian Wild said that Towerbrook has the financial clout to acquire a business like BI, but a striking a deal for Fox’s would be much harder.

“Trying to buy Fox’s will be a tougher nut to crack,”​ Wild explained. “While biscuits may well not be part of 2 Sisters’ plans​ (as a predominantly chilled convenience food business) going forward, Fox’s is still a jewel in the crown and has always had a big price tag.

‘Happen eventually’

“I am sure that Boparan, with debt and pensions liabilities to take into account, would not undervalue Fox’s. However, a sale of Fox’s is almost certainly going to happen eventually.”

Shore Capital partner and head of research Clive Black confirmed that there had been some speculation that Towerbrook was seeking to acquire BI.

 “Quite whether any such deal materialises remains to be seen, as does any strategy for Towerbrook to create a European biscuit player,”​ said Black.

Talks surrounding a potential takeover of Fox’s Biscuits have been permeating the financial sphere since early 2017, with a mystery bidder approaching the manufacturer.

A merger with Burton’s Biscuits was proposed in October of that year, which valued the company at £400m. However, this ultimately fell through.

‘2 sisters remains highly leveraged’  

Black added: “Fox’s has been associated with corporate activity for many years, most frequently as a merger partner with Burton’s Biscuits but, as of yet, to no avail. 2 Sisters remains highly leveraged and the rationale behind a disposal appears clear – that is to reduce debt.

 “Naturally Mr ​[Ranjit] Singh ​[founder of 2 Sisters] will be seeking the most attractive price possible from any such transaction, albeit predicting the price without sight of the financial performance and so forth is not possible.”

Should 2 Sisters decide to offload Fox’s, it would follow a string of disposals made by the company since the start of 2018.

In March, parent company Boparan Holdings completed the sale of its Green Isle and Donegal Catch frozen food businesses, while last October saw 2 Sisters agree to sell its Manton Wood sandwich business to Samworth Brothers, for an undisclosed sum.

Meanwhile, in May, 2 Sisters was expected to continue shedding peripheral business​ in a bid to focus on its core poultry offering, according to an industry insider.

Related topics: Ambient foods, Bakery, Operations

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