Food Group Focus March 2012
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www.rollits.com March 2012 Food Group Focus Whatever happened to the quoted food sector? 2012 certainly got off to a lively start with Müller’s £280m agreed takeover bid for leading British liquid milk processor Robert Wiseman Dairies, following rumours last year that Müller had also been interested in the other quoted liquid milk company, Dairy Crest. Given the strength of Müller’s position in the UK yogurt market, it is perhaps not surprising that the company should be keen on extending its dairy reach into liquid milk in this country. However, Müller’s tremendous success in yogurt has come with the strength of its brand and innovative products. The liquid milk market here is very largely retailer own label and hugely competitive. The Food Producers Index of the London The Christmas trading figures from the Stock Exchange used to be populated by major multiples hardly set the Stock the titans of UK food manufacturing with Market on fire and the overriding focus companies such as United Biscuits and on price in recent years is starting to Rank Hovis McDougall being household show the strain. Long gone are the days names which would have figured in many when the most innovative retailers like a share portfolio. The businesses and the Marks & Spencer relied on a close products may remain, but the Index is partnership with their main suppliers now a pale imitation of what it was in the such as Northern Foods and Geest. In 1990s and before. its place has come the constant round of price tendering which has squeezed Giants Unilever and Nestlé apart, there are so much innovation and investment out still some substantial listed food plcs such of the industry. as Associated British Foods, Cranswick, Kerry and Tate & Lyle. But takeover But the UK is still a great place to do speculation has surrounded others like business with arguably the best retailers Dairy Crest and Greencore, whilst debt- in the world. So it will be interesting to laden Premier Foods has been forced into see whether Müller’s takeover of a series of disposals under new Wiseman is the forerunner of more The leading UK retailers (if not dairy management. It seems inevitable that the acquisition activity by foreign buyers in farmers) will be pleased to see three list of quoted food companies will shrink the British market. strong liquid milk players remaining after further in the next few years. the Wiseman deal (Dairy Crest and Arla being the others), as the chilled own label Almost certainly the power of the big sector saw some marked consolidation four UK retailers, Tesco, Asda, Sainsbury’s Also in this issue last year: the takeover of Northern Foods and Morrisons, together accounting for by 2 Sisters Food Group, the acquisition 76% of British grocery spend, has made Month by month guide to mergers of Uniq by Greencore and Premier Foods’ the Stock Market wary of the prospects and acquisitions Brookes-Avana also going to 2 Sisters. So of UK food manufacturers, with some is this a sign that, in chilled private label justification. Should this be a concern? Rollits advises Riverford Organic at least, food manufacturers believe that Yes, it should be. Britain needs a strong on BoxFresh deal scale is vital in dealing with the major food manufacturing industry to reduce Top chef Tim Bilton collects multiples? Perhaps another explanation is air miles, generate exciting product Champion award that the demise of Northern, Uniq and development and innovative new brands, Wiseman is down to the parlous state of and create the large number of jobs The Pipe and Glass Inn named the quoted food producers. which food production requires. Michelin Pub of the Year 2012 Page 2 Food Group Focus March 2012 Month by month guide to mergers and acquisitions Fats and oils supplier AAK, which has a Sausage casing manufacturer Devro sold its May 2011 major UK presence, acquired US flaked German division to Visko Teepak of Finland. Wynnstay Group announced that it had shortenings maker Golden Foods and YFM Equity Partners backed Andy acquired Wrekin Grain , a grain marketing Golden Brands in Kentucky. and agricultural inputs supplier based Micklethwaite in a MBI at Leeds-based bagel in Telford. The Cake Bake Company , best known for bakery and retail business Bagel Nash . the Skoda car cake and based in Kent, was Mr Micklethwaite’s former business, Leeds-based GT Produce bought Kent sold to West Midlands bakery, Baker Boys, Symington’s, agreed a deal with Unilever business RS Fruits to expand its fresh after going into administration. produce wholesaling activities. to acquire the sauce brands Chicken Pemberton Capital acquired a controlling Tonight and Ragu. Loseley Dairy Ice Cream went into stake in Mathiesons Foods , the Scottish Kraft Foods announced plans to split in two, administration with the loss of up to 83 baker, which had been bought out of one half being a global snacks business, jobs in Cwmbran. administration by a management team including Cadbury, and the other being its in 2010. Andrew Jones Pies in Huddersfield was North American grocery business. the subject of a pre-pack and continues to trade as AJ Pies and Pastries. July 2011 Northern Irish meat products business US private equity firm Blackstone Group, Millar Savoury Foods was wound up after Soft drinks company Britvic acquired part-owners of United Biscuits, bought a administrators failed to find a buyer. wholesale distributor Quinns of majority stake in Blackpool-based Cookstown from C&C Northern Ireland. Valeo Foods, backed by Origin Enterprises Tangerine Confectionery , the UK’s largest and Capvest, agreed the purchase of another sugar confectionery and branded popcorn Bottlegreen Drinks , controlled by Piper Irish food company, Jacob Fruitfield , owners manufacturer, providing an exit for Growth Private Equity, was sold to Northern of Jacob’s biscuits in Ireland, creating a group Capital Partners. Ireland’s SHS Group. with sales of €300m. French dairy group Lactalis acquired Italian General Mills agreed to acquire a 51% US cereals manufacturer Ralcorp agreed dairy company Parmalat , in which it already controlling interest in French yogurt maker to buy Sara Lee ’s North American dough owned 29%, in a deal worth €3.4bn. Yoplait and a 50% stake in the related entity business for $545m. which holds the global Yoplait brands. Sodiaal Nestlé paid €1.2bn for a 60% stake in retains the ownership of the remainder. Leading Chinese company Bright Food Chinese confectionery company Hsu Fu Chi . agreed to acquire a 75% stake in Australia’s Luke Johnson’s Risk Capital Partners Swiss-based chocolate maker Barry Manassen Foods for $416m. acquired a large stake in London artisan Callebaut agreed the sale of its European baker Bread and its wholesale business The Christian Rose led a MBO of gin and vodka consumer business Stollwerk to Belgium’s Bread Factory and the Gail’s café estate. supplier Greenall from the De Vere Group Baronie Group. to create G&J Greenall Group. Leading egg company Stonegate acquired Greencore made a successful cash offer Monmouthshire egg supplier Farmhouse Young & Co sold its 40% stake in Wells & of £113m for chilled foods group Uniq , Freedom Eggs . Young’s, its JV with Charles Wells, to end shortly after which Uniq announced the brewing after 180 years and focus on its pub end of yogurt and everyday desserts Dairy cooperative First Milk acquired estate. Soon after, the McEwan’s and production at its Minsterley site. Kingdom Cheese , a supplier of mozzarella Younger’s beer brands were bought by Wells cheese and cheddar mixes, and Kingdom Wessanen, owner of Kallo Foods, sold & Young’s from Heineken UK for £20m. Dairies , a producer of cottage cheese and its subsidiary Tree of Life UK to a MBI soft cheeses, based in Scotland. Private equity firm Permira sold animal feed team led by Mike Cole, Chairman of producer Provimi to US agrifood giant Brands of Distinction. June 2011 Cargill in a €1.5bn deal. In the Republic of Ireland Musgrave Group, Grocery retailer Haldanes Stores , formed in SABMiller made another hostile takeover owners of the Supervalu brand, agreed to 2009 and with 600 employees, went into bid of A$9.9bn for Australian beer group buy rival Superquinn in administration. administration, followed later by Ugo Stores . Foster’s and received shareholder approval Lincolnshire-based The Original Cake Major UK dairy company Dairy Crest in December. acquired MH Foods in Erith, Kent, a Company acquired Special Little Cakes Acquisitive Israeli flavours company Frutarom manufacturer of spray cooking oils and in Nottinghamshire. acquired Hertfordshire flavours business salad dressings, for £13m. Life-science business Provexis agreed to Aromco for £15m. Ray Coyle, the founder of Ireland-based buy Science in Sport , which supplies sports Grimsby-based fish supplier Superior Largo Foods , agreed to sell a 25% stake nutrition products, for £8m. Seafoods went into administration. in the company to German snack company Nutricia Advanced Medical Nutrition, part Intersnack, which already owned 15% Bacon supplier Becketts Foods , based in of Danone, acquired Complan Food UK , of Largo. Coventry, was acquired by CPC Foods, the nutritional supplements business. whilst Denbighshire seed and fruit bar Associated Seafoods bought prawn business Wholebake was the subject of Carr’s Milling Industries in Carlisle sold its supplier Moray Seafoods and smoked a MBO. Carrs Fertilisers division to Irish salmon processor Lossie Seafoods , both agribusiness, Origin Enterprises, for £19m. based in Buckie. Protexin acquired another digestive products maker, The Healthy Bowels Company , Princes completed the acquisition of Premier owners of Lepicol. Foods ’ canning operations at Long Sutton and Wisbech in East Anglia. September 2011 Attempts to find a buyer for Stilton producer New Zealand dairy company Fonterra Quenby Hall Dairy in administration failed.