Consumer Sector Comment – February 2013

Dato

Cross-border acquisitions continue to feature in the consumer space. Plum Organics, a California-based organic children’s food supplier acquired Plum Baby, the UK-based baby food company from Darwin Private Equity in return for shares. Both companies were started by parents and, coincidentally, shared the “Plum” name. The merged group will have around 150 products, sold in over 13,000 stores with sales of US$120m. The acquisition will give Plum Organics greater critical mass to move into new markets, offering premium products for infants, toddlers and schoolchildren on an international scale.

Another cross-border deal this month, driven by international growth prospects was Li & Fung’s acquisition of UK cosmetics company, Lornamead for US$190 million. Lornamead manages a portfolio of over 20 US, German and UK personal care brands such as Vosene, Finesse, Harmony, Lipsyl and Wrights. The company sells its brands in over 60 countries in a variety of retailers including Boots, Tesco and Sainsbury’s in the UK and Walgreens in the US.

Li & Fung believe the Lornamead transaction should “strengthen the group’s growing businesses globally in health, beauty and cosmetics”. The acquisition will enable them to strengthen relationships with key retailers in the personal care and beauty sector. A particular driver is the anticipated growth in demand for beauty brands across Asia. Euromonitor forecast strong growth in the beauty and personal care market in China for example as consumers increase their purchases of beauty products in the next four years, with particularly strong sales of anti-ageing products, driven by increasing sales to older age groups.

Deals

The Hut Group Ltd, a fast growing online retailer, has acquired Bike Kit Ltd which trades as Probikekit.com from Encore Capital. The road cycling specialist retailer with a global reach offers accessories, components clothing, tyres and frame, and supplements. Recently the Hut completed an equity fundraising to enable a category expansion strategy.

BrandAlley France and NewsCorp have sold their UK subsidiary in an MBO backed by private investors. BrandAlley UK Ltd, an upmarket shopping portal, specialising in a non-stop, designer lifestyle goods was initially set up as a joint venture and was sold at an estimated £2m.

Barratts, the high street footwear chain, has acquired 14 concessions from Famous Footwear, a shoes retailer that went into administration.

QD Stores Ltd, an East-Anglian value retailer, has acquired its competitor Thingmebobs Ltd. The deal value has not been disclosed but the 10 stores based in Ingham generated a turnover of £6.5m. The acquisition is significant because of the high degree of synergies involved.

TheaterMania.com Inc. announced the acquisition of the UK based digital theatre content and ticketing company Bandwidth Communications Ltd that trades under WhatsonStage.com. Terri Paddock, Founding Managing Director of WhatsonStage.com stated; “We look forward to working with TheaterMania to create the first dedicated transatlantic digital theatre media group serving the world’s two great theatre capitals, London and New York”.

Admiral Taverns, the tenanted pub group has been acquired by Cerberus Capital Management from the Lloyds Banking Group for £200m. The deal will help to launch a new phase in the restructuring of the business, which has see the disposal of 800 non-core pubs over the last three years.

A leader in the children’s nutrition market based in the US, Plum Organics Inc., has announced the start of their global expansion with the acquisition of Plum Baby UK. The acquisition will increase the retail sales of the group to over $120m.

R&R Ice Cream Plc., a UK based ice-cream manufacturer, has acquired the frozen yoghurt brand YooMoo for an undisclosed sum. The product expansion is seen as an entry into the promising frozen yoghurt market.

Greencore Group Plc. has sold the distressed Minsterley Desserts business to Muller Dairy for an estimated £4.3m. The move will enable Muller which is also based in Shropshire to expand into new areas of production such as own-label puddings.