PAI Partners said it had bought a majority stake in Winterbotham Darby from current owners Equistone and minority shareholders LDC. The chilled food manufacturer's management would remain invested in the business, it said. Houlihan Lokey acted as the exclusive corporate finance advisor to the shareholders.
The acquisitions were announced on the same day as Nomad Foods's purchase of Findus Switzerland. It followed swiftly after Endless confirmed it had acquired Hovis and Nestlé's announcement that it had acquired healthy meal kit brand Mindful Chef, both on 6 November.
Commenting on the apparently sudden flurry of acquisitions, Mark Lynch, partner at Oghma Partners, told Food Manufacture: "After a hiatus of transactions over the first lockdown and the summer some processes that were delayed due to COVID or launched just as COVID started are coming to fruition. However, our expectation is that deal flow will still be well down in the second half of the year and for 2020 overall compared to last year."
'Active investor in food'
Commenting on the PAI Partners deal, Lynch said: "PAI continue to be an active investor in the food category, which is one of their key areas of focus. The fund has experience in the chilled category with Stoefflers and Homann and Yoplait and more recently Labeyrie. I would expect that Addo and Winterbotham Darby have to stand up to scrutiny on their own as financial deals. If some synergies can be generated by combing the two together then that would clearly enhance returns for PAI."
Robert Lawson, founder and managing partner of Food Strategy Associates, said: "Buying both businesses simultaneously is a difficult thing to pull off. But PAI are one of the leading private equity houses when it comes to UK food, having been one of the original investors in United Biscuits in 1999 and then having taken R&R [Ice Cream] on its journey from UK retailer brand business to a European leader in ice cream. So we shouldn't be surprised that they have pulled this off and we could anticipate this will be the start of the journey for PAI in the chilled foods sector and not the end of it.
"Other industry participants will be looking at the development with interest. Those having second thoughts about their involvement in the sector will be thinking a new exit route has emerged. Those looking to lead the long awaited industry consolidation will be thinking there is a new heavyweight in the ring competing for the assets."
Winterbotham Darby is a supplier and producer of chilled meats (chorizo, salami and specialist hams), pâté, olives, antipasti and continental morning goods (brioches, crêpes and waffles). It has a leading position in continental foods, including olives, antipasti and charcuterie, and in recent years has become a major supplier of vegan meat alternatives and other plant-based products.
The company owns brands including Squeaky Bean, unearthed and Vadasz. Established in 1962, the company manages complex supply chain demands for many of the UK’s major supermarkets and has developed long-standing relationships with more than 100 production partners, 300 agricultural partners and 400 livestock farms across Europe.
Added-value chilled food
PAI Partners also announced a simultaneous agreement to buy a majority holding in chilled savoury pastry producer Addo Food Group alongside Winterbotham Darby, subject to the clearance of the European Competition Commission. Both groups were successful added-value chilled food companies, which were intended to be brought together to create a platform to speed up growth across the new business.
Headquartered in Nottingham, Addo produces more than 287 customer own-label and branded products every year. The business manufactures a range of products, including sausage rolls, hot pies, slices, pork pies, scotch egg products and quiches, which it supplies to the UK’s leading names in food retail including all the major supermarkets.
With a trading history that dates back more than 160 years, Addo employs more than 2,500 people and operates across five UK sites in Nottingham, Market Drayton, Poole and Shaftesbury. The business traded as Pork Farms Group until 2007, when it was acquired by Vision Capital from Northern Foods.
Kerry Food's chilled savoury pastry operations
In 2014, the company completed the acquisition of Kerry Food’s £100m chilled savoury pastry operations. Deborah Bolton, chief executive officer, said: “The sale follows three years of successful investment from LDC, they have been a great supporter of our group since 2017 and their investment and backing has been demonstrated in the growth we have seen under their tenure.
“We are excited as a management team and looking forward to working with our new investor; PAI Partners to deliver our plans over the coming months and years. Addo will continue to be led by its existing management team, headed up by myself as CEO.”
Addo Food Group, alongside partner Newton, has been shortlisted for the Partnership of the Year Award in the 2021 Food Manufacture Excellence Awards. Winterbotham Darby's Clitheroe site has been shortlisted for Site Team of The Year in the same awards.
'Best added-value chilled food company'
The acquisitions were intended 'to continue the improvement of the results that the two businesses had achieved with their customers, especially through innovations, category insight, quality and service', said PAI Partners. The overall ambition was 'to build the best added-value chilled food company in the UK'.
Steven Higginson, chief executive of Winterbotham Darby, said: "We have enjoyed a very successful partnership with Equistone, which has supported us to significantly enhance our presence in the UK grocery market and establish Winterbotham Darby within a number of new, fast-growing chilled food segments. We are excited to be entering the next phase of our development with PAI Partners’ support, where our focus will remain on providing outstanding service and an innovative range of high-quality products to our valued customers.
“Winterbotham Darby will continue to be led by its existing management team, who have a strong and lengthy track record of driving successful innovation. We look forward to working with PAI Partners to deliver our growth plans over the coming years.”