The sale of Noble Foods will attract a number of international buyers looking to replicate its success in the UK’s free-range egg market, according to sources close to the company.
Having refinanced with Rabobank two years ago, it emerged this week that the £595m-sales egg business, owned by Michael Kent and Peter Dean, had gone a step further, instructing long-term corporate advisors Rothschild to put the business up for sale. And while many City insiders said the £400m price was too high, advisors believe interest will be considerable.
“They’ve always had private equity players knocking on their door as it’s a cash generative business. But they believe international trade players will also want to tap into their expertise,” said one source.
Noble has transformed the UK’s free-range market with its own-label work, such as Sainsbury’s successful Woodland range, and its own Happy Egg Co and Big & Fresh brands.
Bids could come from Asian or South American meat players and US companies also have reason to be interested. A ban on caged eggs in 2015 in California will open up the market for higher welfare eggs in a country where 95% of the 90 billion eggs produced each year are from caged systems. And Noble already has a foothold there, having launched Happy Egg Co in Kroger and Ralphs stores in California last year. “California could prove a swing factor for a buyer,” said one City source.
While Noble’s pre-tax profits fell to £11.9m in 2011 it was a one-off blip brought on by the EU battery cage ban, according to an insider.
Noble had room to grow at home, he added. “Eggs are increasingly seen as a healthy source of protein and the shift to higher welfare standards is still ongoing. People are willing to pay.”