Pukka Pies has kicked off an M&A process that could value the brand at upwards of £100m as supermarket sales of its savoury pastries continue to boom.
The Grocer has learned the family-owned pie maker has hired bankers at Houlihan Lokey to explore its options, including a possible sale or raising new investment.
The process is at a very early stage, with advisors at the investment bank testing the waters with potentially interested parties.
Dealmakers in the City named Compleat Food Group and Samworth Brothers, the two biggest companies in the savoury pastries category, as favourites to strike a deal, but the process is expected to generate high levels of interest from the rest of the trade in the UK and overseas as well as private equity investors.
Sources added pie-making rival Peter’s, which has been owned by private equity firm Stage Capital since 2007, could be rolled up alongside Pukka in a consolidation play, with the business having a close relationship with advisors at boutique corporate finance firm Spayne Lindsay.
Business is booming at Leicestershire-headquartered Pukka thanks to the company focusing more heavily on the grocery retail channel, to go alongside its traditional place at football stadiums and fish & chip shops around the country.
Accounts filed at Companies House this week for the year ended 27 May 2023 showed revenues jumped 22% to £79.1m, while EBITDA soared 39% to £9.2m.
Supermarket industry data also revealed retail sales value increased 23% to £85m last year as volumes rose 13% [NIQ 52 w/e 30 December 2023]. It bucked the pies and savoury pastries category trend for falling volumes by appealing to younger consumers with a raft of innovation. Pukka moved away from traditional pie fillings to launch takeaway-inspired fusion flavours such as doner kebab pie last year, joining pepperoni pizza and chip shop chicken curry pies.
The business also won new listings and improved distribution with existing customers.
EBITDA is understood to have moved to about £12m in the current year, with City sources putting a potential price tag of £100m or more on the business, while some industry sources said the valuation was closer to £200m.
Pukka CEO Deborah Ewan told The Grocer: “In the last five years, Pukka has outperformed our sector. That is down to our amazing Pukka team.
“Looking to the future, our three-year strategy has ambitious plans for our growth. As a result, we are reviewing different ways to bring new investment into the business, which will allow us to realise those plans.
“Our values and our purpose remain the same and it’s very much business as usual for our teams.”
MD Isaac Fisher added: “Pukka has had another fantastic year, and that is down to the hard work at our bakery, the innovation we’ve baked up and the full-on flavour we continue to deliver.
“In the last year alone, Pukka has added over £13m to the category, more than any other brand, with Pukka sales growing 23% – more than two times faster than the total category. As a brand shoppers know, love and trust, we continue to bring additional spend to the hot pies category, with 85% of our growth incremental to existing category sales. That’s because we continue to excite and invite shoppers.”
Trevor and Valerie Storer set up Pukka in the 1960s, with the business still owned by the family. Today, it employs more than 400 staff and sells in excess of 60 million pies a year.
Pukka is the second biggest brand in the category, behind Ginsters, owned by Samworth, and ahead of Wall’s, owned by Compleat, according to the latest Top Products survey for 2023 by The Grocer.
Dealmakers said there could be potential competition issues with a takeover by Samworth, which also owns Higgidy, or Compleat, which owns Pork Farms and Wrights Pies.
“The really bold play will be snapping up both Pukka and Peter’s, providing access to a rapidly growing brand and also an enviable foodservice business with the latter,” one City source added. “It’s a very logical combination, and there is still Holland’s Pies in play following the failed sale process last year.”
Recent accounts for Peter’s Food Service, which makes savoury pastry and sausage products sold through retailers and foodservice, showed a 22% rise in revenues to £75.8m in the year ended 27 May 2023, with the retail side up 27% to £47.2m and foodservice up 13% to £20.5m (13%). Adjusted EBITDA climbed from £1.1m to £3.5m and pre-tax profits increased from £359k to £2.6m.
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