AIM-listed Real Good Food has agreed to sell Napier Brown to Tereos Group for £34m.
Tereos is the world’s fifth-largest sugar group, specialising in processing sugar beet, sugar cane and cereals. It also has leading positions in the markets for alcohol and starch derivatives.
Real Good Food, which along with its sugar distrubution business in the UK and manufactures baking ingredients, jams and sweet bakery products, believes a sale will clear its debt which stood at £36.3m last September, and provide the resources for investment focused on the company’s remaining added-value businesses.
The deal will enable new investment in “attractive” markets including cake decoration, food ingredients and premium bakery.
Pieter Totté, chairman of Real Good Food, said the changes taking place within the European sugar market meant the future of Napier was best served by it becoming part of an international production group.
“We believe Tereos is the best choice for both customers and employees. This transaction will allow us to focus all our resources on the continued growth of our remaining businesses.”
The deal has been influenced by the EU Commission’s decision to end sugar beet production quotas in 2015 – three years earlier than expect and Real Good Food believes it needs the direct backing of a powerful producer to ensure cost-effective sources of sugar are available to it.
The deal is conditional on shareholder approval at a Real Good Food extraordinary general meeting on 14 May with completion anticipated the following day.
Napier Brown is Europe’s largest non-refining sugar distributor. The business operates under two distinct brands: Napier Brown and Whitworths Sugar. The Napier Brown brand serves the food, drink and industrial sectors, as well as wholesale and reseller clients, while Whitworths sugar is Napier Brown’s consumer brand in the retail and wholesale sectors.
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