Woodward Foodservice is a business with an eye on a rather bigger prize these days.
Chief executive Ed Hyslop's ambition since joining Woodward in 1997 has been to create a genuine rival to the big two leading national foodservice operators Brakes and 3663 First for Foodservice.
Until last year's acquisition of DBC Foodservice, which was ranked 15 in The Grocer's Big 30 list of the UK's leading wholesalers in September, this was beyond his reach.
Before the deal, Woodward had a turnover of £210m - by no means small but a long way behind the £1.6bn and £1,29bn enjoyed by Brakes and 3663 respectively. Hyslop expects the newly merged company to return sales figures of more than £550m. He admits this is still a long way off the big two but says that it will provide the scale to start taking them on.
The new player has certainly thrown the cat among the pigeons at a time when pressures on the sector are mounting thanks to the supermarket's entry. But Hyslop insists there is still room in foodservice for a variety of operators in the sector.
“More people are eating out of home and despite the odd fluctuation, we see it as a long-term growth market. The sector is likely to polarise with a few big players delivering a professional service to larger caterers while there will also be a market for good local wholesalers who will deal with much smaller outlets,” Hyslop explains.
Hyslop and his team have spent the past four months focusing on the existing customers of both companies to ensure there is no drop in service levels. At the same time he has employed a small separate integration team, that has been solely looking at the best ways of bring the two companies together.
“In 12-months I want to have one brand and one identity,” he claims. “Nothing has been confirmed in terms of name. It could be DBC or Woodward but it may be time to think of something new that reflects the way we want to take the business forward.”
In August 2005, Woodward emerged as an entity in its own right when Hyslop led a management buyout, backed by Icelandic investment groups Baugur and Talden, from Giant Bidco - the company that took the Big Food Group private earlier in the year. Lloyds TSB Commercial Finance provided debt finance for the MBO.
Hyslop says that although the traditional reason for private equity firms to become involved in mergers and acquisitions is often to strip out costs and develop leaner businesses, the DBC deal is more of a marriage than a takeover.
“Woodward has traditionally been strong in terms of frozen and fresh fish, while DBC is more focused on ambient goods and chilled meat,” he points out. “We have also now got a much more comprehensive geographical coverage. Most of Woodward's depots are in the midlands, the north and Scotland with DBC mainly dotted around the south.”
The bulk of Woodward's contracts are in what Hyslop refers to as the profit sector - bars, pubs and restaurants. DBC's biggest clients are in the cost sector dominated by hospitals, schools and prisons.
Hyslop says that having added the massive £130m-a-year MoD contract in October, it now feels that he has to integrate three companies. While there is little duplication between the Woodward and DBC businesses, Hyslop says there are still efficiencies that can be delivered.
“We are looking at the systems such as IT and the delivery infrastructure which once integrated should deliver significant savings.”
Despite a busy year of integration ahead, Hyslop isn't ruling out further deals to increase the scale of the business and bring it even closer to the big two.
“We are certainly not planning any more acquisitions at the moment but if the right strategic opportunity arises we will have a look,” he says. “I think we have enough scale in terms of volume and geographical coverage to compete by offering fresh approach to foodservice with a professional and flexible customer focus.”
“Next year we are looking to bring out the strengths of the two business, to emerge in good shape in order to really drive the business forward.”
What's certain is the new company will find a much higher position in our wholesaler ranking, which will be published later this month and will most likely hit the top ten.
Depot numbers: 28
Turnover: £550m
Growth year-on-year: N/A
Type of operation: Delivered wholesaler
Chief executive Ed Hyslop's ambition since joining Woodward in 1997 has been to create a genuine rival to the big two leading national foodservice operators Brakes and 3663 First for Foodservice.
Until last year's acquisition of DBC Foodservice, which was ranked 15 in The Grocer's Big 30 list of the UK's leading wholesalers in September, this was beyond his reach.
Before the deal, Woodward had a turnover of £210m - by no means small but a long way behind the £1.6bn and £1,29bn enjoyed by Brakes and 3663 respectively. Hyslop expects the newly merged company to return sales figures of more than £550m. He admits this is still a long way off the big two but says that it will provide the scale to start taking them on.
The new player has certainly thrown the cat among the pigeons at a time when pressures on the sector are mounting thanks to the supermarket's entry. But Hyslop insists there is still room in foodservice for a variety of operators in the sector.
“More people are eating out of home and despite the odd fluctuation, we see it as a long-term growth market. The sector is likely to polarise with a few big players delivering a professional service to larger caterers while there will also be a market for good local wholesalers who will deal with much smaller outlets,” Hyslop explains.
Hyslop and his team have spent the past four months focusing on the existing customers of both companies to ensure there is no drop in service levels. At the same time he has employed a small separate integration team, that has been solely looking at the best ways of bring the two companies together.
“In 12-months I want to have one brand and one identity,” he claims. “Nothing has been confirmed in terms of name. It could be DBC or Woodward but it may be time to think of something new that reflects the way we want to take the business forward.”
In August 2005, Woodward emerged as an entity in its own right when Hyslop led a management buyout, backed by Icelandic investment groups Baugur and Talden, from Giant Bidco - the company that took the Big Food Group private earlier in the year. Lloyds TSB Commercial Finance provided debt finance for the MBO.
Hyslop says that although the traditional reason for private equity firms to become involved in mergers and acquisitions is often to strip out costs and develop leaner businesses, the DBC deal is more of a marriage than a takeover.
“Woodward has traditionally been strong in terms of frozen and fresh fish, while DBC is more focused on ambient goods and chilled meat,” he points out. “We have also now got a much more comprehensive geographical coverage. Most of Woodward's depots are in the midlands, the north and Scotland with DBC mainly dotted around the south.”
The bulk of Woodward's contracts are in what Hyslop refers to as the profit sector - bars, pubs and restaurants. DBC's biggest clients are in the cost sector dominated by hospitals, schools and prisons.
Hyslop says that having added the massive £130m-a-year MoD contract in October, it now feels that he has to integrate three companies. While there is little duplication between the Woodward and DBC businesses, Hyslop says there are still efficiencies that can be delivered.
“We are looking at the systems such as IT and the delivery infrastructure which once integrated should deliver significant savings.”
Despite a busy year of integration ahead, Hyslop isn't ruling out further deals to increase the scale of the business and bring it even closer to the big two.
“We are certainly not planning any more acquisitions at the moment but if the right strategic opportunity arises we will have a look,” he says. “I think we have enough scale in terms of volume and geographical coverage to compete by offering fresh approach to foodservice with a professional and flexible customer focus.”
“Next year we are looking to bring out the strengths of the two business, to emerge in good shape in order to really drive the business forward.”
What's certain is the new company will find a much higher position in our wholesaler ranking, which will be published later this month and will most likely hit the top ten.
Depot numbers: 28
Turnover: £550m
Growth year-on-year: N/A
Type of operation: Delivered wholesaler
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