Food and beverage sector mergers and acquisitions comment – March 2008

Dato

Deal volume remained low this month, but what is interesting is the sale of two businesses to groups which are on buy and build strategies. Red Mill has been acquired by Tayto, which has transformed itself from a regional player in the crisp market into the third largest crisp and snack business in the UK.

Red Mill’s “Mr Porky” pork scratchings and the “Transform-a-Snack” range have been added to the group’s other brands including Golden Wonder and Real Crisp. Dorset Cereals has been snapped up by Wellness Foods, the buy and build vehicle backed by Lydian Capital whose brands include Rowse Honey, Grove Fresh juice and Fruit Bowl. Although operating in different categories, the strategies of Tayto and Wellness have so far been simple and remarkably effective – build a stable of leading brands and drive growth through NPD and innovation.

Deals completed in the UK

Wellness Foods, the natural, organic and health food company which is backed by Lydian Capital, has acquired Dorset Cereals for an estimated £50m. Dorset Cereals produces high-end muesli, porridge and muesli bars. Wellness plans to double sales through investment in NPD and driving international sales.

Blueberry Group, a speciality food supplier, has undergone a £12m secondary management buy-out backed by Close Brothers. 3i has now exited the business. Blueberry provides speciality ambient food to high-end retailers such as Waitrose and John Lewis, as well as farm shops and garden centres. Close is looking to back Blueberry in making a number of acquisition targets in the food sector.

Glanbia Group, the dairy and ingredients group, has announced its exit from pigmeat activities with the sale of Glanbia Meats Ireland to its management team for €35m. The disposal forms part of Glanbia’s stated strategy of focusing on key growth areas of cheese and nutritional ingredients.

CDB Meats, an importer and distributor of branded and own-label meat products to the retail and manufacturing industries, has been acquired by Marfrig, the listed Brazilian beef, pork and chicken processor. The consideration was reported to be £6m.

Red Mill Snack Foods Ltd has been acquired by Tayto, the snacks company. Terms of the deal were not disclosed. Red Mill is one of the leading suppliers of retailer and branded snacks to the marketplace. The acquisition, which follows that of Golden Wonder in February 2006 and the Welsh-based Real Crisp brand in November 2007, will extend the Group’s range with brand-leading products.

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