American food wholesaler Innovative Bites has swooped to add Hancocks Cash & Carry to its growing confectionery empire in a deal worth about £100m, The Grocer can reveal.
Hancocks private equity owner H2 Equity Partners hired corporate advisors last year to find a buyer for the pick ‘n’ mix supplier, as revealed by The Grocer.
Innovative Bites, founded in 2008 by Vishal Madhu, acquired historic sweets maker Bonds of London in a multimillion-pound deal a year ago in the first step in a drive to become the UK’s leading confectionery supplier.
The group supplies the supermarkets and discount chains in the UK and Europe with US brands, including Hostess Twinkies, Cookie Dough Bites and Baking Buddy Mega Marshmallows, and doubled sales to about £50m in 2016.
“Our acquisition of Hancocks aligns with our aspirations to significantly grow Innovative Bites’ scale in the UK and across Europe,” Madhu said. “Our businesses are highly complementary and differentiated in our products, geography and approach, so we are hugely excited about our combined potential.
“The transaction allows Innovative Bites to combine our best-in-class manufacturing and high-quality confectionery range with Hancocks unparalleled route to market.”
Mark Watson, Hancocks exiting chairman, added it was “a great acquisition” for both businesses. “Hancocks adds to Innovative Bites a successful management team that have developed a strong product and customer base. Combine this with Innovative Bites’s American range and Bonds of London’s flexible packaging facility, and it will be a unique proposition in the confectionery category.”
H2 has been involved with Hancocks since November 2012 when it backed a £50m MBO led by CEO Mark Watson, who is now executive chairman.
Revenues have grown to £124m under H2’s ownership, with operating profits of £6.6m and EBITDA of £10m, according to the latest accounts.
The price paid by Innovative Bites was not disclosed, but dealmaking sources put the value at more than £100m. It is the largest acquisition to date by Innovative, which said the deal marked a “major move” in its plans.
The combined group has a sales team of more than 150 staff, selling to more than 40,000 customers and offering more than 7,000 confectionery products.
Hancocks has bolted on several businesses in past few years, including van delivery confectioner Bobby’s in 2016 and rival confectionery wholesaler JTS in 2014. It also bulked up its buying power in February last year when it joined Today’s Group.
Founded by Ray and Liz Hancock from a Leicestershire sweet shop in 1962, with sons Andrew and Adrian taking over in 1986. The demise of Woolworths in 2009 further helped accelerate growth, with sales reaching £100m before the H2 buyout.
Hancocks now operates 20 depots and has the largest range of sweets and chocolates in the UK, with more than 5,000 SKUs.
Innovative Bites was advised on the transaction by Houlihan Lokey (M&A and debt adviser), Addleshaw Goddard and BDO. Spayne Lindsay advised H2 Equity Partners.