Bakkavör Group acquires Hitchen Foods
The move would enable Bakkavör Group to gain a significant foothold in the fresh cut vegetable market, which has grown by 80% since the year 2000.
19/10/05 Bakkavör Group has acquired Hitchen Foods plc for £44 million. Due diligence has been completed and the acquisition price has been paid. Hitchen Foods is a manufacturer of fresh cut vegetables and convenience salads and sells predominantly to the major UK retailers. Kaupthing Bank provided a bridge loan for the acquisition.
Hitchen Foods has performed well in recent years. For the current financial year, the Hitchen Foods’ EBITDA is expected to amount to £8.5 million and turnover to total around £48 million. Hitchen Foods will be consolidated into Bakkavör Group’s accounts from the day of the acquisition and will be reflected in the Group’s fourth quarter 2005 financial results. The transaction will not have a material effect on Bakkavör Group’s financial results until the year 2006.
The primary strategic reason to acquire Hitchen Foods is to enable Bakkavör Group to gain a significant foothold in the fresh cut vegetable market, which has grown by 80% since the year 2000 and is forecast to continue to grow well, given the UK consumers’ demand for freshly prepared food. In addition, the acquisition strengthens Bakkavör Group’s relationship with key customers. The outlook for further growth is promising and there is potential for future expansion at Hitchen Foods’ current site.
As in previous acquisitions, Bakkavör Group’s management has emphasised the importance of retaining the services of key employees. Bakkavör Group has already entered into an agreement with Hitchen Foods’ key management. Also, Hitchen Foods’ previous owners have agreed to provide consultancy to ensure a smooth transition.
Hitchen Foods, a supplier of fresh cut vegetables and convenience salads to the retail marketplace in the UK, was established in 1961 as a family business. The company employs around 750 people and has one site in Wigan, Lancashire, in the UK. The company’s main product areas are fresh cut vegetables, which count for over half of sales, followed by convenience salads.
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