Village Bakery sourdough M&S

Village Bakery produces M&S’ premium own label sourdough using Wildfarmed flour

Village Bakery is seeking new owners, with its private equity backer having tasked bankers with running an auction for the premium private-label bread maker.

Limerston Capital, which acquired a controlling stake in the business in 2021, has hired US investment bank Stephens to oversee its exit, The Grocer has learned.

While the process is still in early stages, Village Bakery is expected to command a price tag of £160m, representing a near 8x multiple of EBITDA, which The Grocer understands is approaching £20m.

It would cap a remarkable turnaround story for the Welsh family-run bakery following a devastating fire in 2019 that destroyed a third of its production capacity.

“Valuations expectations are very punchy, especially for an own-label supplier, but the business is very well-invested and should prove to be very attractive to potential buyers,” a City source said.

“So much of the bakery industry is under-invested, whereas Village’s automation is staggeringly good and light years ahead of most competitors. This is a growth story buyers can get behind. One issue is that customer concentration is heavily skewed towards M&S, but if it’s snapped up by a bigger group that becomes less important and reduces risk overall.”

A trade deal is thought to be the most likely outcome, but dealmakers ruled out a move by any of the UK’s three major players in the category: Warburton’s, Hovis and Allied. A global group such as Aryzta Bakery, Grupo Bimbo or Global Bakeries would make more sense, another City source added.

Village Bakery can trace its history in Wales back to 1934 and is today run by the third generation of the Jones family, with Alan Jones taking on the Wrexham bakery in 1964 and transforming it from a regional player to the number one supplier of private label baked goods to supermarkets.

London-headquartered Limerston Capital bought a majority stake in Village in early 2021, with the Jones family retaining an interest. The family also continued to run the business, headed by MD Robin Jones and brother Christien as projects director, with father Alan stepping down as chairman after 60 years in the industry.

Village Bakery, which employs in excess of 500 staff, produces traditional bread and rolls, as well as bagels, scones, crumpets, pancakes, pies, pastries and Welsh cakes. It also runs a separate gluten-free facility.

Its main customer is M&S, which accounts for a large proportion of its £70m-plus turnover, but the business also works with Waitrose, Sainsbury’s, Tesco, Morrisons, Ocado and Co-op, and makes a range of products under its own Jones’ Village Bakery brand.

Village featured in M&S’s Tom Kerridge-fronted ‘Farm to Foodhall’ advertising campaign last year, highlighting the supplier’s partnership with Wildfarmed, using the regenerative farming business’ flour to bake the retailer’s premium own-label sourdough bread. Village’s MD Robin Jones starred alongside Kerridge in the ad, introduced as ‘M&S Master Baker’.

Village today operates from a number of bakeries on a 35-acre campus in the heart of Wrexham. A new 140,000 sq ft ‘super bakery’ opened in 2021 – supported by investment from Limerston – to replace the factory burned down in 2019’s fire. The premises also house the company’s headquarters and is home to a baking academy and innovation centre designed to train the next generation of bakers and develop new products.

It also runs a 70,000 sq ft dedicated gluten-free site and a 50,000 sq ft facility for bagels, sesame buns, scones, dough balls and pancakes, as well as a 45,000 sq ft site opened in 1991, in which it makes its Village Bakery branded range.

Village Bakery could not be reached for comment, Limerston has not yet responded to request for comment and Stephens declined to comment.