Ferrero has fought off fierce competition from Valeo Foods Group and Bain Capital to acquire Burton’s Biscuits from Ontario Teachers’ Pension Plan for a price understood to be around £300m.
The deal continues the Italian confectionery giant’s expansion into the sweet biscuit category, where it is already the second-largest player in the world following takeovers of Belgian brand Delacre in 2016, Danish manufacturer Kelsen and Kellogg’s cookie brands in 2019, as well as Fox’s last year.
City sources said Ferrero, which has revenues of more than €12bn, was able to push harder than its rivals to win the auction for Burton’s.
Valeo’s bid was complicated by only recently going through its own sales process, with Bain, Cinven and PAI duking it out for the Irish ambient food group.
Bain agreed to buy Valeo for £1.5bn last month – but put in a separate bid ahead of the deal’s completion, with former Burton’s CEO Ben Clarke to help with its offer for the Jammie Dodgers maker,.
In the end, Ferrero beat Bain in a shoot-out, with the synergies available from the combination of Fox’s and Burton’s enabling the Ferrero Rocher owner to put in a higher bid, dealmakers said.
There have been numerous attempts to bring Fox’s and Burton’s together over the years, dating back as far as 2007 when Duke Street Capital owned the Wagon Wheels manufacturer.
Ontario Teachers’ Pension Plan had also been thwarted a number of times in tilts at Fox’s, including a mooted merger and IPO in 2017, and was last year outmuscled by Ferrero with a £246m offer.
The combined group now becomes the third largest biscuit manufacturer in the UK, according to Euromonitor.
The deal was “a great outcome” for Ontario, which bought Burton’s in 2013, with an EBITDA multiple of almost 10x, City sources added.
The Canadian pension fund and Burton’s management team have led a recovery in recent years following a slump in revenues and profits in 2016, when the company sold a licence to make Cadbury biscuits to Mondelez International.
Strong demand for biscuits throughout the coronavirus pandemic further helped sales grow, climbing 11.5% back to £275m in 2020.
Burton’s CEO Nick Field said: “We are delighted to be joining the Ferrero-related company, and look forward to bringing together the businesses’ complementary brand portfolios, high-quality capabilities, management talents and highly skilled workforces, which offer a compelling strategic rationale and an exciting future for Burton’s.”
A spokesman for the Ferrero-related company said the acquisition would allow the group to enlarge the offer of products in the sweet biscuit market, fulfilling the evolving needs and trends of consumers.
“The Ferrero-related company plans to maintain and further build Burton’s Biscuits strong brand authenticity, while supporting the company with distribution and expansion to new markets and with new category segment opportunities,” she added.
Stamford Partners ran the auction process for Ontario, while Houlihan Lokey advised the Ferrero-related holding company CTH.