Free-from brand Gosh is close to sealing a £50m deal with a new owner after it revived a three-year long M&A process amid soaring demand for plant-based foods.
The Grocer understands the supplier, which produces a range of vegan falafel bites, burgers and sausages, has received an offer to take over the company, with the potential buyer currently running final due diligence checks.
The buyer is thought to be a trade player as all private equity firms have already passed on the business, according to one dealmaker.
Gosh appointed advisors from investment bank Houlihan Lokey in 2018, but potential interested parties weren’t willing to meet the price expectation of owner Richard Loebenberg, who founded the business in 1998.
Nestlé and meat supplier Cranswick are both understood to have weighed up a deal but were put off by the valuation, a City source said.
Numerous PE houses also looked at Gosh, and LDC made an offer of £50m at the tail end of 2019. However, the deal fell down at the final hurdle, leading Loebenberg to pause the process in early 2020.
Gosh revenues have surged from £5m in 2015/16 to more than £20m. Newly filed accounts at Companies House show sales rose 12% to £20.9m in the year ended 31 May 2020.
Operating profits declined from £4.1m to £3.5m as it spent almost £1m on “strategic and financial consultants to assist with the future development and direction of the business”.
After adding back the non-recurring cost, EBITDA was £5.1m, an 8.5% increase on 2019.
Read the full version of the story on thegrocer.co.uk/finance later today.
Also in this week’s edition of The Grocer, Brakes Group loses £231m after Covid lockdowns savage its hospitality business, Samworth shuts its sports nutrition business, meat alternatives brand This is record breaking funding round and more.
Check out thegrocer.co.uk/finance for full details later today.
On the markets this morning, THG has looked to improve its governance with the formation of a new, stand-alone risk committee.
The formation of the committee is intended to “both enhance certain aspects of the group’s corporate governance arrangements and ensure the skillsets and experience of the company’s non-executive directors are best utilised across its various board committees”.
The newly-formed risk committee will be responsible for assisting the board in its oversight of risk, including the ongoing monitoring, management and mitigation of principal and emerging risks, and advising the board on the group’s overall risk appetite, tolerance and strategy.
The Risk Committee, which will meet at least four times a year, comprises Zillah Byng-Thorne, who has been appointed chair of the committee, Damian Sanders and Dominic Murphy, all existing independent non-executive directors of the company.
As a result of the formation of the risk committee, the existing audit & risk committee has been renamed as audit committee.
Matthew Moulding, CEO and exec chairman, commented: “These changes highlight the Board’s recognition of the importance of strong corporate governance and reinforce its continued commitment to ensuring that a robust corporate governance framework is in place which underpins the long-term prospects of the group.”
The FTSE 100 has opened the day up again, rising a further 0.4% to 7,155.6pts to add to the post Covid highs it achieved yesterday.
Risers include Hotel Chocolat, up 4.8% to 369p, Devro, up 2.6% to 199p and Nichols, up 2.4% to 1,500p.
The day’s fallers so far include Science in Sport, down 1.8% to 77.1p, Naked Wines, down 0.9% to 779p and THG, down 0.6% to 611.5p.
Yesterday in the City
A resurgent FTSE 100 jumped 1.3% to 7,125.2pts yesterday – a new post Covid high.
Stocks that rely to the reopening of society were particular gainers, with WH Smith up 5.3% to 1,693p, SSP Group, up 4.2% to 277.7p, Greggs, up 4.2% to 2,703p, Compass Group, up 3.9% to 1,581p, C&C Group, up 3.7% to 252p, Greencore, up 3.5% to 130p, Bakkavor, up 3.4% to 133.6p, and Marks & Spencer, up 3.9% to 133.6p.
Associated British Foods was up 4.8% to 2,323p after announcing a 200%-plus jump in third quarter Primark sales, which will lead to the group’s full year profit being above previous expectations.
The day’s fallers included McBride, down 4.6% to 86.8p, Naked Wines, down 2.6% to 786p, Morrisons – following recent rises due to TD&R’s bid – down 2.3% to 241p and Hotel Chocolat, down 2% to 352p.