2 Sisters Food Group is close to offloading its bakery division, which includes Holland’s Pies and Irish frozen pastry supplier Portumna, after striking a conditional agreement with an Irish boutique investment firm.
The poultry giant expects the deal to formally complete next week (on 6 December) following “various procedural steps”, according to a letter to employees – seen by The Grocer – from group owner Ranjit Singh and CEO Ronald Kers.
The letter revealed 2 Sisters exchanged contracts for the bakery assets with Arafura Ltd, an Isle of Man-based company and a subsidiary of Ireland-based Innovest Holdings, which has interests in tissue paper manufacturing, food production and commercial real estate.
“Like our other sales [of non-core assets], we have always been clear businesses would only be sold at the right time, to the right purchaser, for the right price,” the letter to employees said.
“After a lengthy process, we believe Holland’s and Portumna would find a good new home with Arafura Ltd, and it gives both sites the maximum potential for future growth.”
A separate internal memo from bakery division MD Nigel Church added: “Innovest Holdings is committed to building on the already strong Holland’s and Portumna businesses, with plans to support the existing management team to grow the business and diversify into new markets across the EU and beyond, while also growing the UK business.”
2 Sisters hired corporate advisors in 2021 to find a buyer for the bakery division as part of an ongoing sell-off of non-core assets.
However, the group wasn’t able to land a deal, with potential trade buyers uninterested, and the sale process was abandoned in the summer before being revived by interest from Innovest, according to City sources.
“This latest proposed deal underlines the fact that we remain very much on track to meet our strategic aims of focusing on our core businesses, improving our operational and financial performance and delivering for all our customers,” the letter from Singh and Kers said.
“We would like to express our ongoing gratitude to all colleagues at Hollands and Portumna who have shown nothing but professionalism and dedication in recent times when we know that speculation around the future of both businesses can be unsettling.”
A spokesman for 2 Sisters told The Grocer: “We are currently progressing a sales process for our Holland’s Pies and Portunma pastry businesses with an interested party. We will be able to update fully once we have an outcome of the transaction process.”
Holland’s traces its roots back to a Lancashire baker’s shop in 1851, with the business moving to its Baxenden bakery near Accrington in 1929, where it now makes more than one million pies a week.
Its range of chilled and frozen pies and puddings are available in supermarkets, as well as fish & chips shops and football stadiums.
This week, Holland’s announced a raft of new listings with Tesco in the north-west and national agreements to expand distribution to include Iceland and Morrisons.
Brand manager Leanne Holcroft said: “We are proud to have had such success with our national and regional listings over the past few months.
“As the nation’s best-selling frozen pie brand, making our range widely available across the UK is important to us – and we’re delighted that even more people will now be able to enjoy a delicious taste of the north-west.”
Portumna has been making a range of frozen unbaked pastry products for retail and foodservice customers since 1987, working with all the big supermarkets, brands such as Birds Eye and Quorn, and wholesalers such as Booker and Brakes.
Holland’s and Portumna are two of the final businesses remaining from 2 Sisters’ £342m takeover of Northern Foods in 2011.
A restructure started in 2018 as the group looked to bounce back from years of losses and a food safety scandal in 2017.
It has already sold Goodfella’s, Fox’s Biscuits and Christmas pudding maker Matthew Walker in recent years, as well as the red meat division and the Manton Wood sandwich business.
If the bakery deal completes next week, 2 Sisters will be left with the core poultry business and the ready meals division.
The turnaround under Kers, the former Müller boss who joined in mid-2018, has made great strides, with a significant increase in profitability at Boparan Holdings in the 53 weeks to 1 August 2020.
However, rising commodities costs and labour shortage saw the group sink back to an operating loss in the 52 weeks to 31 July 2021. Inflation ramped up further in 2022 following the start of Ukraine conflict.
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