Vision looks North
24 November, 2006
Supplier Northern Foods has agreed a £160 million sale of its speciality bread, chilled pastry, cakes and flour milling businesses to private equity firm Vision Capital.
The deal includes Fletchers Bakeries (with its La Baguette Doree business), Smiths Flour Mills, Park Cake Bakeries, and chilled pastry businesses including the Pork Farms and Bowyers brands.Vision chief executive Julian Mash told British Baker Vision planned to invest in the new businesses, working with existing management. Vision was interested in the medium term growth of the businesses he said: "As a buyout investor we make things happen, it is not a top down approach. We are indifferent to the short-term."Mash said all the Northern companies had prospects and potential, "it is just a question of what that potential is." But it was "likely that the businesses may not end up together for all time".Vision is also set to receive a £30.3 million insurance payout after the fire at Fletchers' Sheffield facility in July 2006 on completion. Mash commented: "There is an interesting situation in Sheffield following the fire. I have been talking to MD Scott Wallace about how and what we reconstruct."The acquisition marks Vision Capital's entry into the food sector. It already owns businesses in diverse sectors including finance and manufacturing. Mash said it would not rule out further acquistions in the bakery sector to support the new companies.The sale to Vision is expected to complete in January, subject to approval by Northern Foods' shareholders at an Extraordinary General Meeting. The disposal is in line with a strategy outlined by Northern Foods in May 2006. It said it was selling businesses representing approximately 40% of its sales, to focus on five categories where it has strong brands, or own label positions. These are pizza, biscuits, ready meals, sandwiches and salads and puddings.Following completion, Northern Foods expects to pay part of the proceeds into its pension scheme. The remainder will be used to reduce borrowings and invest in the retained businesses.Northern Foods, chief executive Pat O'Driscoll said: "The conclusion of this process, as a single transaction, is very positive for our staff and customers. We can now focus all our attention on our core categories."