Consumer sector comment- November 2012

Dato

The beverages sector has been an active one for mergers and acquisitions activity, seeing some of the largest transactions in the consumer space over the past few months. In September, Heineken took control of APB, the maker of Tiger Beer, for US$ 6 billion, enabling it to expand its presence in emerging markets. This follows AB InBev’s bid for Modelo, Mexican brewer and maker of Corona, earlier in the year for US$ 20 billion.

Meanwhile, in the UK soft beverages market, the Boards of AG Barr (the company behind Irn-Bru) and Britvic have now agreed terms for a merger which will create a £1.5 billion turnover group. The proposed merger follows falling revenues at Britvic over the year to September 30th after a recall of newly designed Fruit Shoot bottles. Meanwhile, despite strong sales growth in the 6 months to the end of July, AG Barr also reported a fall in profits reflecting higher sugar prices and intense competition in the soft drinks market.

AG Barr aquired Rubicon, an exotic fruit juice drink brand in 2008. The brand has grown rapidly and earlier this year, a new range of Rubicon branded ice cream and ice lollies was launched. The merger will allow the Rubicon brand, in particular, to expand further internationally on the back of Britvic’s distribution channels. The merger would remove the need for AG Barr to invest in a new manufacturing facility and could give rise to significant cost savings, which are estimated to be approximately £35m.

The proposed tie-up between AG Barr and Britvic reflects an on-going defensive trend within M&A activity in the consumer space in more mature markets, as companies move to strengthen existing brand portfolios as well as reduce costs.

Deals

William Jackson Food Group, producer of Aunt Bessie’s Yorkshire puddings, has acquired Abel & Cole, a branded vegetables box delivery company from private equity house Phoenix. The acquisition will enhance William Jackson’s other vegetable businesses, Hazeldene and Parripak.

Rutland Partners private equity has acquired Buy As You View for £33.1m in an all equity transaction. The company offers electrical and household goods that are paid for on a weekly basis. The Chairman, Adrian Hill and CEO, Graham Clarke will remain with the business and are investing alongside Rutland.

Hozelock Group, a UK based manufacturer of consumer gardening products for watering has been acquired by EXEL Industries, a French specialist in precisions spraying technology for the agricultural sector. The move will allow them to gain a larger share of the consumer market in the UK, Benelux and Scandinavia.

Two hotels from the collapsed Von Essen Hotels have been acquired by the private equity vehicle Hamilton Bradshaw led by entrepreneur James Caan. The properties Ston Easton Park in Somerset and Sharrow Bay in Cumbria were acquired for a total of £4.5m.

Wear Inns, a company aimed at acquiring and managing pubs across the North of England, has successfully acquired The Colonel Prior in Sunderland and The Park in Bradford. It has completed 11 acquisitions since July when the company gained access to funding from two private equity firms.

Manchester based brewer and pub owner Joseph Holt has acquired The Horse and Jockey, a pub in the south of the city from Hoi Polloi Pub Company. CEO, Richard Kershaw stated that the pub enjoys an excellent reputation and is located in a popular area.

Edward Billington & Son, a trading and manufacturer of food for the consumer and agriculture sector, has acquired Bar and Restaurant Food Ltd, a manufacturer and supplier of soups, sauces and recipe dishes.

Iceland has acquired one of its biggest suppliers Loxton Food Company and secured 300 jobs in the Manchester area. It plans to focus the supplier on product innovation and secure a long term future for the loss-making business.