Trade buyer could carve-up Uniq, M&A experts
On March 24 Uniq finalised a novel ‘pension deficit for equity’ deal whereby its £400m+ pension deficit was scrubbed, in exchange for shareholders surrendering around 90.2% of the firm’s value to the pension fund.
The pension fund immediately appointed Spayne Lindsay to sell its 90.2% holding in Uniq, and a statement from the board on April 1 said the company had had interest "regarding a potential offer for, or investment in, the company”.
Minsterley the ‘big issue’
However, although he said Uniq ceo Geoff Eaton had done “remarkably well” to salvage something of value from Uniq, Rollits corporate finance partner Julian Wild told FoodManufacture.co.uk that the group’s Minsterley desserts site was a “very big issue” for anyone interested in the company.
Uniq is currently reviewing its desserts business – where products are also made at a site in Evercreech – with a reporting date set of April 26; Eaton told this publication on April 1 that the board has no plans to exit the category.
Wild helped broker the sale of Minsterley to Uniq during his tenure at Northern Foods in 2004, and said. “It’s been a major problem for about the last 20 years … the site was losing quite a lot of money then [when Northern sold it on] … and to the best of my knowledge it has been ever since."
Private equity or trade interest?
As to whom ‘indications’ of interest could refer to? “I can’t see private equity being interested,” said Wild. “The pension issue has been sorted, but the business is largely private label, which will have private equity running scared” . He attributed this to worries about dealing with the major retailers: low margins, uncertain contracts.
“There may well be trade interest in parts of the business…Greencore might have a bit of a think about it,” he said. “But I can’t see that happening personally – Greencore has picked up … sandwich business recently, and the retailers won’t like that," given the potential for market monopolisation, since Uniq makes sandwiches for Marks & Spencer.
Said Wild: “The sale is the consequence of the pension deal … and at least the business is now theoretically saleable. Although it’s a pretty mixed bag, as the residue of what’s left over from the Unigate days.”
Greencore should get its skates on
Phil Jackson, head of food mergers and acquisitions (M&A) at Grant Thornton said he also thought a private equity buyer was unlikely: “I’d tend to agree, the business has obviously seen various parts sold off over the years … I think it’s more likely it will be taken up by [a] trade [buyer].”
“I wouldn’t be surprised if Greencore were interested in certain parts of the chilled business,” he added.
Other M&A experts have said that Greencore must act fast to avoid becoming a takeover target in its own right, after missing out on Northern Foods to Ranjit Boparan, with Bakkavör cited as another potential target for the Irish firm.
Asked recently if Greencore still had an appetite for acquisitions following its Northern disappointment, a spokesman said: "We firmly believe that further consolidation is important for the sector, and with that in mind I am sure we will consider our options for the future."
