The Italian food group seeking to acquire Princes has pulled out of the process, blaming falling demand and a significant drop in inflation.
Newlat was in advanced discussions to buy Princes and understood to be in a two-way fight with UK private equity firm Epiris.
But on Friday, Newlat “halted negotiations” for its acquisition, citing the “challenging market environment” in the UK.
After an “in-depth analysis” it noted “a decrease in demand and a significant drop in inflation” which it said was “expected to lead to pressures on both sales volumes and on retailers’ demands for price reductions”.
Having deemed it “appropriate to revise the values proposed” in its initial offer, Princes owner Mitsubishi Corporation rejected the lower offer.
Newlat said it “remains open to re-evaluating the target” should Mitsubishi change its stance on its lowered offer.
As The Grocer went to press it was unclear where Newlat’s actions had left the process and whether Epiris remained actively engaged in talks.
But a City source said “Newlat’s comments about UK supermarkets trying to actively drive down prices are pertinent and pointed,” adding the statement could be a negotiating tactic to unsettle Epiris.
Mitsubishi postponed an auction in the first half of 2023 as the initial round of bids had not met its expectations.
Last month, accounts for Princes showed the group fell to a £50.6m pre-tax loss in the year to 31 March, despite a £300m sales boost amid “extraordinary inflationary pressures”.
Mitsubishi, which has owned Princes since 1989, tasked investment bank Houlihan Lokey with finding a buyer for Princes over a year ago.
Newlat, which in 2021 acquired Naked and Chicken Tonight maker Symington’s as part of its ambitious plans to grow sales to €1bn across Europe, said it remains keen to grow its business through acquisitions.
It stated: “The company confirms its acquisitive profile and the continuous search for external growth opportunities, supported by an increasing availability of its own resources and the presence of significant financial partners who were ready to provide their full support to the group in front of this great opportunity and who we are confident will continue to support us in the future.”
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