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Bakkavor has pulled the plug on its plans to float on the London Stock Exchange, blaming current “volatility” in the IPO market.
The UK ready meals supplier revealed its long-awaited flotation plans last month, which was expected to value the business at between £1bn and £1.5bn.
Owners Agust and Lydur Gudmundsson and US hedge fund Baupost intended to raise £100m from the issue of news shares and part of their stakes, as well as floating at least 25% of the company.
Bakkavor, which supplies the supermarkets with ready meals, pizza, salads, hummus and desserts said it would use the money to further invest in the business, pay down debt and provide the selling shareholders with a return on their investment.
The business has been expected to put a price on its shares any day, ahead of the IPO.
Instead, Bakkavor said in a short statement to the stock exchange this morning that it would no longer proceed with its plans.
The statement added that the company received “sufficient institutional demand” to cover the offering, but the board took the decision that proceeding would not be in the best interests of the company, or its shareholders, given the current volatility in the IPO market.
“Bakkavor will continue to pursue its proven strategy within the fast-growing fresh prepared food sector, where the group’s expertise and focus on innovation have made it a clear market leader,” the business said.
“The group’s ability to deliver long-term sustainable growth is underpinned by its strong financial position. The business continues to trade well and against this backdrop, the board remains confident in the outlook for the group.
Telecommunications firm Arqiva also announced this morning that it would postpone its proposed flotation amid “IPO market uncertainty”. The business plans to revisit the listing once IPO market conditions improve.
Morning update
Total Produce acquires 50% of California based “The Fresh Connection”
Listed fresh produce supplier Total Produce (TOT) has acquired a 50% equity stake in California-based The Fresh Connection.
Founded in 1994 and headquartered in Lafayette, the company is one of North America’s leading fresh produce export companies with sales in 2016 of $165m
The Fresh Connection is engaged in the year-round distribution and export of a range of fresh fruits and vegetables to customers in more than 35 countries. The company serves its customers from operations in four key production regions.
It partners with a network of growers throughout the US, Mexico, South America, South Africa and Australia to enable it to provide many varieties of fresh produce, principally citrus, apples, pears, grapes, berries, cherries and stone fruit, to its customers.
Hank Miller will continue as co-shareholder and CEO of the business and Will Mehrten will continue as president.
Total Produce chairman Carl McCann said: “We are delighted to become shareholders in The Fresh Connection. This transaction further broadens our US presence and provides us with strategic access to other key markets.
“We look forward to working with Hank, Will and the excellent people in The Fresh Connection as it continues to develop its very successful business expansion in future years.”
Fresh Connection CEO Hank Miller added: “We are proud to partner with the Total Produce Group. This transaction will further strengthen the business we have developed and grown over many years. We believe our partnership will create opportunities for The Fresh Connection which will benefit all stakeholders, including our growers, suppliers, employees and, of course, our customers.”
Shares jumped 2% to 208p as markets opened this morning.
Yesterday in the City
Morrisons (MRW) recovers early losses of more than 1% to close at 0.5% down to 222.9p despite continuing its impressive recovery and outpacing its big four rivals with like-for-like growth of 2.5%. The City frowned upon the Yorkshire retailer missing analyst expectations for the second quarter in a row. Morrisons has now achieves eight successive quarters of like-for-like growth.
TATE & Lyle (TATE) jumped 1.2% to 672.5p as the ingredients maker benefited from rising demand by food manufacturers for sweeteners. The London-listed business reported a 26% increase in first-half pre-tax profits and raised its outlook for full-year profits.
Kraft Heinz (KHC) fell 0.8% to $77.07 as investors were unimpressed that sales grew just 0.7% in the third quarter. CEO Bernardo Hees also warned of a continued challenging environment in its domestic US market. But it was the first rise in revenues for the global giant since Kraft and Heinz merged in 2015.
Elsewhere, British American Tobaccco (BAT), Diageo (DGE) and Greggs (GRG) all registered gains, up 1.4% to 4,960.5p, 1.4% to 2,580.5p and 1.2% to 1,290p respectively.
The FTSE 100 leapt 0.9% to 7,556.74 points after the Bank of England lifted interest rates for the first time in 10 years.
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