Seabrook Crisps is on the verge of being taken over by private equity house LDC in a deal understood to be worth in the region of £35m.
The Yorkshire-based snack maker hired corporate finance advisor McQueen late last year – as revealed by The Grocer – to look at all “strategic options”, including a possible sale.
LDC overcame serious competition from a large number of other private-equity firms interested in Seabrook and is in the process of thrashing out last-minute details for a majority equity stake in the company, with the deal expected to close by the end of Thursday (16 July).
The private-equity firm, owned by Lloyds Banking Group, said back in May it was eyeing up further deals in the food and drink industry, backed by a £1.2bn war chest to invest in UK mid-sized companies.
It already counts Ministry of Cake, The ComplEAT Food Group and Intercontinental Brands among its 90-strong portfolio, and the £154m flotation of posh mixer brand Fever-Tree provided the firm with a significant windfall in November.
“LDC clearly like the food sector and have had some tremendous successes with the likes of Fever-Tree giving fantastic returns,” a City source said.
However, the dealmaker added there would be challenges ahead as supermarkets continue to delist suppliers and reduce SKUs as part of range reviews. “It is up against Walkers and the current grocery environment doesn’t play well for a mid-tier brand, which is what Seabrook is. But on the flipside, supermarkets always want something to put up against PepsiCo and Walkers, and Seabrook doesn’t yet have national listings, so there is plenty of opportunity there. But LDC will need to spend some money investing in the factory.”
Seabrook CEO Jonathan Bye, who insisted in January that a majority stake sale was not necessarily the preferred option, has led a dramatic turnaround at the Bradford-based company since his 2012 appointment.
After pre-tax losses of £1.7m in 2011 the company climbed back into the black in the year to 30 March 2014 to record a profit of £1.6m as it won a number of new listings and introduced a new lattice-cut range and packaging.
Revenues have slipped from a 2010 peak of £28.3m, but the £24.5m top line last year represented a 7.5% hike over 2012-13 – and Bye expects turnover to have hit £27m in the 2014-15 financial year.
Seabrook’s sales were up 12.9% to £32.7m [IRI 52w/e 28 February 2015], which compared favourably with total category value growth of 2.1% [Kantar 52 w/e 1 February 2015].
LDC and Seabrook declined to comment.