New Covent Garden Food owner Daniels Group is up for sale, The Grocer has learnt.
The chilled food supplier, which also makes Johnsons juice, Farmhouse Fare desserts, International Cuisine ready meals and sliced prepared fruit for retail and foodservice, is a subsidiary of publicly listed global foodservice company Singapore Airport Terminal Services (SATS).
SATS is understood to have appointed its relationship bank HSBC in Singapore to handle the sale and to be seeking at least £200m. Negotiations are said to be well advanced and second-round bids were due in this week.
New Covent Garden Food revenues are estimated to represent about a quarter of the group’s £177m turnover and will be the jewel in the crown for potential buyers, which are believed to include private equity firms and at least one overseas trade buyer.
“Daniels is a business a lot of people will have a look at but it will be difficult to find many trade players who want it in its entirety,” said one M&A source close to the deal. “New Covent Garden will be the most valuable asset but it will be a sledgehammer to crack a nut for a trade soup company to buy the whole business with the view of selling on 75% of it,” he added.
Private equity was a more likely fit, said industry sources, but recent market turmoil may have hampered firms’ ability to finance the deal. It could also have made them question the circa £200m price tag.
A deal was by no means a foregone conclusion, said experts. “It’s perfectly possible that if the offers come in and they’re derisory they’ll look to hold on to it,” said one source.
Sales of New Covent Garden soups have risen 2% in the past year to £59m [Symphony IRI 52w/e 9 July 2011] but they are lagging behind younger brands such as Glorious! and Yorkshire Provender, which both reported strong double-digit growth, albeit from smaller bases.
The Daniels Group refused to comment and SATS was unavailable.
New Covent Garden revamps as it feels the heat from rivals (20 August 2011)
Covent Garden scraps super-premium range (28 May 2011)