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Italian food group Newlat has bought canned food giant Princes from Japanese conglomerate Mitsubishi Corporation in a deal worth £700m.

With the acquisition of Princes, Newlat said it will achieve a consolidated turnover of about €3bn and “a strong position in new categories in the UK market”.

The group said it will double its product category offering and becoming one of the main multi-brand and multi-product companies in the food sector in Europe.

The £700m sum will be paid via £650 in cash and £50m in Newlat Food stock, which will see Mitsubishi remain a major shareholder in the combined group.

Princes Group’s Chief Executive Officer, Simon Harrison, said: “This is an exciting prospect for Princes, and we are delighted that Newlat share our confidence in the group’s strategic growth plans, brand strategy, operational excellence and people culture.

“The intended sale remains an ongoing process and further information will be shared in due course.”

Following the completion of the intended acquisition of the Group, Newlat Food and its group will become ‘New Princes Group’.

Princes Limited will retain its identity and operate as a UK-based subsidiary of the New Princes Group.

The newly formed New Princes Group will have a global operating network of 31 factories and a diversified portfolio across ten categories.

The closing of the transaction is subject to the obtainment of antitrust clearances by the competent antitrust authorities and the consultation of both the European and the Dutch works council within the Princes Group and is expected to take place by the end of July 2024.

Angelo Mastrolia, chairman of Newlat Food, commented: “We are extremely proud to have agreed this transaction, marking a crucial milestone in our growth strategy. Princes Limited is a prestigious company, and integrating its operations with Newlat Food allows us to further solidify our position as a leader in the food sector.

“The economic outlook of the new group gives us confidence in a future of sustainable growth, poised to create value for all stakeholders. The newly combined group will offer a broad range of high-quality products, addressing the needs of an increasingly demanding and diverse global market.

“This transaction enables us to enter new market segments and better serve our customers with an even more comprehensive, innovative, and unique product offering.”

Newlat plans to increase the new group’s turnover to €5bn by 2030, while profit growth will be enhanced through a combination of cost and structural synergies.

The deal brings to an end a lengthy sales process that began in early 2023, when  Mitsubishi charged investment bank Houlihan Lokey with finding a buyer for the company.

Mitsubishi postponed an auction in the first half of 2023 as the initial round of bids had not met its expectations.

Newlat was the front-runner for the deal earlier this year, but announced to the Italian stock exchange it had walked away from negotiations in February citing the “challenging market environment” in the UK.

Morning update

Retail inflation continued to ease in May, falling back to 0.6% in May from 0.8% in April and reach its lowest level since November 2021.

Non-Food prices remained in deflation at -0.8% in May, down from -0.6% in the preceding month. The 0.8% drop in prices is the most significant since October 2021.

Meanwhile food inflation decelerated to 3.2% in May, down from 3.4% in April to mark the thirteenth consecutive monthly deceleration in the food category.

Food price inflation is now at its lowest since February 2022.

Fresh Food inflation slowed further in May, to 2.0%, down from 2.4% in April and at its lowest since November 2021.

Ambient food inflation edged back to 4.8% in May from 4.9% in April and is now at its lowest point since June 2022.

Helen Dickinson, CEO of the British Retail Consortium, said: “Shop price inflation has returned to normal levels, at just 0.6%. This was helped by slowing food inflation, with fresh food inflation falling to its lowest level since November 2021.

“Meanwhile, ambient food inflation remained stickier, especially for sugary products which continued to feel the effects of high global sugar prices. In non-food, retailers cut furniture prices in an attempt to revive subdued consumer demand for big-ticket items, and football fans have been able to grab some bargains on TVs and other audio-visual equipment ahead of this summer’s Euros.”

“Retailers are playing a key part in bringing inflation down, but future government policy must support this too. Retail plays a key role in every part of the country, from the smallest village to the largest city, employing millions of people, and serving millions more.

“As the cost burden of new policies rises - from business rates to packaging taxes – this affects not just the businesses, but their customers too. With an election in a matter of weeks, it is vital that parties detail their support for customers and retailers in their upcoming manifestos.”

Mike Watkins, head of retailer and business insight, NielsenIQ, said: “After a number of months of falling input prices, we are now seeing food inflation stabilise and retailers continue to pass on price cuts to shoppers.

“Across the industry whilst inflationary pressure has eased and there is some improvement in shopper sentiment, the unseasonable weather has dampened retail sales so lower prices look set to continue and promotional activity is likely to increase drive demand.”

On the markets this morning, the FTSE 100 has started the week edging back by 0.1% to 8,307pts.

Early risers include Ocado Group, up 5.2% to 393.2p, Naked Wines, up 4.1% to 64p and PZ Cussons, up 2.1% to 113.4p.

Fallers include FeverTree, down 4.3% to 1,129p, Nichols, down 2.6% to 1,003.1p and Kerry Group, down 2% to €77.80.

This week in the City

It’s a quiet week on the markets following the Bank Holiday as General Election campaigning continues in the UK.

The sole company update in the diary is the Pets at Home annual results issued tomorrow morning.

B&M European Value Retail also holds its AGM tomorrow.