The Japanese owner of Princes has been holding exploratory talks with Young’s Seafood about a takeover of the processor in a deal that could value the group at up to £200m.
The giant trading group Mitsubishi Corporation approached the private equity owners of Young’s late last year to test the water ahead of a potential acquisition, The Grocer has learned.
Despite initial optimism that a deal could be negotiated, the tentative talks have stalled since Christmas. “It could have easily happened very quickly once the new year got under way, but it has since gone quiet,” a senior City source said.
“Mitsubishi appear to have downed tools for the present, so any deal would be unlikely to happen before the summer.”
Another dealmaker added that the sheer size of the Japanese organisation, which has annual revenues of 6.4trn yen (£42.6bn) and employs 60,000 staff worldwide, made it “very bureaucratic”.
A senior City source said: “The investors behind Young’s may well push the button on a full auction at some point in the first half of the year, especially if discussions with Mitsubishi have come to nothing. But it is more of a question of ‘when’ not ‘if’ for a formal process to start.”
John West, Dawnfresh, Marine Harvest, Thai Union, CP Foods, BRF and Hilton, which expanded into fish with its acquisition of Seachill last year, could all show interest, the source suggested. “The underlying business in Young’s is good but it lost huge volumes when Sainsbury’s moved its business so it needs to rebuild.”
Investment house Stamford Partners has been working with Young’s in the past few years, advising it in 2015 when owners Lion, Highbridge and JP Morgan explored a sale. The process hit a dead end when Sainsbury’s switched its own-label salmon business, worth £100m in annual revenues, from Young’s to rival Marine Harvest.
Young’s, which was part of Findus until Nomad Foods acquired the group’s European arm for £500m in August 2015, has been fighting to rebuild the business over the past two years.
Sales fell to £497m in 2015/16, but the performance of the business “continues to accelerate”, new CEO Bill Showalter told The Grocer in April.
This week Young’s revealed progress in plans to expand overseas, securing its first supermarket listings in the US with selected SKUs listed in 4,000 Walmarts and Sam’s Clubs, in addition to 800 US outlets owned by Ahold Delhaize.
Lion paid £1.1bn for Findus back in 2008, just ahead of financial markets around the world crashed. The PE firm reduced its holding in the business in 2012 as part of a financial restructuring that saw Highbridge and JP Morgan take stakes in a debt for equity swap arrangement.
All parties declined to comment.
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