2 Sisters Food Group has hired bankers to find a new home for its hot cross bun bakery in Derbyshire as part of continuing efforts to offload non-core assets.
Investment bank Piper Sandler is charged with running the auction for Gunstones Bakery after the business improved trading and profitability, The Grocer has learned.
The process is understood to still be in the early stages but there are a number of interested parties exploring a potential deal.
Gunstones employs close to 1,000 staff at the site in Dronfield where it makes hot-cross buns, bread rolls, iced buns and garlic bread for the supermarkets and other industry customers.
The bakery supplies M&S with its entire range of hot cross buns, including a variety of flavours such as banoffee pie, bramley apple, chocolate and cheese, as well as vegan options. It is one of the UK’s biggest suppliers of the product into retail and makes more than 40 million in the lead up to Easter.
A City source said the bakery was performing well after improving significantly in 2023 and continued on a “good trajectory” thanks to new listings and a big shift from hard-up shoppers to own label.
Underlying profits are understood to have reached more than £7m, with 2 Sisters hoping to achieve a multiple of 5x to 6x in a sale.
Possible buyers are thought to include Finsbury Food Group, which is on the acquisition trail after being taken private earlier this year, along with Baker & Baker, William Jackson and a handful of the smaller PE houses.
“The site still needs a bit more investment, but it is a good set-up and has won new contracts with two more of the major mults recently, so it’s in really good shape,” the source added.
The most recent accounts available for the business on Companies House, for the year ended 30 July 2022, showed revenues jumped 19.1% to £86.9m thanks to new business wins and growing trade with existing customer.
Gunstones can trace its history back to 1862 and the business opened its first bakery in Sheffield in 1925 before moving to the current site in Dronfield.
2 Sisters picked up the business as part of its 2011 Northern Foods takeover. The factory used to also make sandwiches and sushi until it lost a big contract in 2016 and was forced to restructure, undergoing an extensive investment programme in 2021.
2 Sisters has been engaged in a long-term sell-off of non-core assets as part of a turnaround plan and a renewed focus on the main poultry business.
A deal to sell Holland’s Pies and Irish frozen pastry supplier Portumna to an Irish boutique investment firm – revealed by The Grocer in December last year – has since fallen through as the buyer was hit with a number of obstacles, including issues with insurance related to the sites. The Grocer understands 2 Sisters is once again exploring options for the assets.
2 Sisters has disposed of 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.
It now only has a handful of assets remaining from the £342m Northern Foods takeover.
A spokesman for 2 Sisters and Gunstones said the company does not comment on speculation. Piper Sandler declined to comment.
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