Crisps supplier Tyrrells has entered exclusive talks with Langholm Capital after the private equity firm tabled a bid as high as £40m, The Grocer has learnt.
The exclusivity arrangement is timely as Tyrrells' founder Will Chase is likely to be keen to complete the sale before the Chancellor increases capital gains tax from 10% to 18% on 6 April.
It is understood four other private equity firms had tabled lower offers for Tyrrells, whose sales soared 64% to £9.6m in the year to February [Nielsen], but a source close to the City claimed a £40m price tag had been agreed.
"The headline price of £40m for Tyrrells is an amazing amount for a company with a turnover of £10m," said one private equity source. "The timing is very interesting with the capital gains tax deadine looming - Langholm could use this to negotiate the price down and put more conditions into the deal. If talks break down in the next three weeks, Chase will have no time to push through another deal before the tax deadline." Rumours about an imminent sale have circulated since January after it emerged Chase had hired financial advisers at BDO Stoy Hayward to perform due diligence after receiving many unsolicited approaches.
Chase is expected to retain a stake to realise his ambitions of distilling vodka out of potatoes too small to turn into potato chips. He has already committed the £5m he won from Bank of Scotland's Corporate £25m Challenge to the project to help build a distillery at its Herefordshire farm. But it is rumoured Langholm, which is in the process of selling Dorset Cereals, is lining up a new chief exec and finance director. "We don't comment on gossip," said Tyrrells MD Les Sayers.
Tyrrells' turnover rose 44% for the year to 31 March 2007, while pre-tax profit fell 18.6% to £1.3m due to increased potato and staffing costs. The accounts also revealed Tyrrells had sold freehold land and buildings for £1.5m last October.so who is langholm?
Langholm Capital has been investing in consumer products and services companies for more than 50 years and is in the process of selling Dorset Cereals.
In 2005, Langholm led a management buyout of the fast-growing cereal brand, which is now hotly tipped to be bought up by a large cereal company.
UK financial services organisation Just Retirement is also among its current investment portfolio, as is Finnish skincare and cosmetic company Lumene and Danish furniture specialist Cane-Line/Sika-Horsnaes. The private equity firm's business strategy is to buy growing companies with the ability to produce above-average returns in which Langholm can have an influence on the business's direction and development.
Earlier this month Langholm forced plus-size clothing retailer Elvi into administration.
It had funded a £10m MBO in October 2006, but recently refused to supply extra funding to the chain and withdrew from the business.