Consumer Sector Comment – December 2013

Date

YFM’s acquisition of technical sailing clothing manufacturer Gill Marine, in a deal advised by Clearwater’s Consumer team at the end of September, set the scene for an active final quarter for M&A in the UK outdoors space.

On the retail side, JD Sports Fashion acquired a majority stake in online specialist sports store ActivInstinct for an undisclosed sum. ActivInstinct supplies premium, technical sporting and outdoor footwear, apparel and equipment and was founded by Simon Millet, originally as Millet Sports. JD Sports will work with the existing management team of ActivInstinct in order to increase its UK market presence and will also continue its expansion overseas. The ActivInstinct acquisition followed shortly after JD’s acquisition of a majority stake in Tiso Group. Tiso was launched in 1962 by Graham Tiso, a mountaineer, and his wife. The company employs about 300 staff in Scotland and the north of England with 16 stores. In a statement, the company said the deal will allow Tiso to grow and develop its business which includes Alpine Bikes, George Fisher and Blues the ski shop.

On the product side in the outdoor sector, Calida’s announcement that it planned a full acquisition of French sports company Lafuma was an interesting example of strategic diversification into a new business area via M&A. Calida, the Swiss owner of high end lingerie brand Aubade, took an initial 15.2% stake in Lafuma in early 2013. Lafuma was founded in the 1930s by three brothers as a rucksack company and has evolved into a significant sports and outdoor clothing producer, owning ski and mountain brands such as Eider, Killy and Oxbow. The acquisition fits with Calida’s long-standing aim of diversifying its business into “a new business segment with attractive growth prospects”. We anticipate ongoing activity in the outdoor and performance sector with appetite from both trade buyers and private equity.

More Deals

Neilson Active Holidays, the ski and activity holidays operator, was acquired by Luke Johnson’s Risk Capital Partners in a management buyout transaction from Thomas Cook. The deal had a value of £9.1 million. Established in 1978, Neilson Active Holidays has reported revenues of £70m and operates nine Beach Clubs in Greece and Turkey, offering activities such as sailing, windsurfing and tennis. The company also offers ski holidays and operates 119 cruising yachts. The sale of Neilson ties in with Thomas Cook Group strategy to focus on key brands and products for profitable growth. Risk Capital also acquired a majority stake in Cruise.co earlier in the year.

La Fornaia was acquired by David Wood Baking, the UK based bakery operator. The company plans to invest £500,000 in La Fornaia over the next year. Mr David Wood said: “We definitely see a strong future in the artisan bakery sector as people turn to speciality breads – such as focaccia, ciabatta and Panini – which is why we are keen to increase our footprint in this area of the bakery business. La Fornaia’s pure hand-crafted, Italian-style speciality breads are the perfect addition to our group, and the acquisition is in keeping with the massive investment we have made in our artisan facilities at the bakery in Dudley.”

Burton’s Foods, the owner of Jammie Dodgers and Wagon Wheels, was acquired by Teachers Private Capital, the private equity investment arm of Ontario Teachers Pension Plan. This deal has a value of £350 million. The acquisition will enable Burton’s to expand its business further in overseas markets.

Park Holidays UK, the UK based operator of caravan holiday parks, was acquired by UK-based investment trust company Caledonia Investments plc. The deal had a value of £172 million. The transaction will enable Park Holidays to improve its parks around the south of England and further grow its business. The acquisition will result in expansion of Caledonia’s unquoted businesses and increase its shareholders’ worth.

Noble Investments (UK) plc, the UK based rare coin, banknote, medal and stamp dealer, was acquired by Stanley Gibbons Group plc, the UK based stamp company. The deal had a value of £45.6 million. Mr Jasper Allen, Chairman of Noble, stated: “As part of Stanley Gibbons, we look forward to Noble’s businesses flourishing within a larger and more international entity, which is able to provide the resources necessary to accelerate Noble’s development”. The Noble acquisition will allow Stanley Gibbons to broaden its offering to include antique coins, fine wine, jewellery and manuscripts.

LuxBox Ltd, the UK based luxury subscription giftbox retailer, was acquired by Boxdelux Ltd, another UK based online gift shop subscription retailer. Ms Holly Hutchinson stated: “We are very excited about the merging of these two fantastic companies. We feel very strongly that by joining these two companies, we can further continue to provide an outstanding service to those looking for a treat for themselves, or for an ideal gift for someone special. We are excited to introduce the LuxBox Subscribers to a higher end choice of subscriptions, with exclusive Boxdelux offers for existing members.”

Virgin Wine Online was acquired by an MBO team. The deal had a value of £15.9 million and was backed by Mobeus Equity Partners. Mr Jonathan Gregory, Partner and Chief Investment Officer of Mobeus, stated: “We are delighted to back an excellent team and to be involved with the iconic Virgin brand. We believe that the online wine market will continue to grow strongly and Virgin Wines will continue to mature as an independent business.”