Real Good Food sells snack bar business Brighter Foods

Real Good Food (RGF) has sold snack bar business Brighter Foods to The Hut Group (THG) for £43m.

The firm, which also has a cake decoration division comprising Renshaw and Rainbow Dust, held an 84.3% stake in the business through its subsidiary NBF. The balance is owned by Brighter Foods’ managers. As such, RGF is set to receive £35.6m from the sale.

RGF said the net assets being disposed of amount to £17.3m, resulting in a profit on disposal of £20.4m.The proceeds, it said, will be used to reduce net debt, contribute toward the group’s pension deficit and provide working capital to support the needs of its remaining cake decorating business (see table below). 

As a result, RGF’s total net debt is expected to reduce from £47.6m (as at 31 March 2021) to £21.2m. It added that the board will be undertaking a ‘thorough’ review of its working capital needs in the coming weeks, which may result in further payments to loan note holders and the pension scheme to further de-risk the balance sheet. The transaction is expected to complete on 11 May 2021.

The sale comes after a RGF recorded a £4m loss in its recent half-year results, although it noted some recovery in Q3.

“We are very pleased with the disposal which crystallises substantial value for the group and enables us to halve our debt burden at a stroke, whilst materially improve the funding of the pension scheme,” said executive chairman Mike Holt.

“It also provides a basis for further balance sheet restructuring, as we look to accelerate and maximise value within Renshaw and Rainbow Dust Colours.”

He described Brighter Foods as a “very good business” which he is sure will continue to grow and develop under THG’s ownership.

“We wish Robin Williams, Brighter’s founder, and his team at Brighter Foods all the best,” he added.

RGF has shed many of its business in recent years to focus on its core divisions. Jams and preserves business R&W Scott was bought out by management in 2018 with Haydens Bakery and Garrett Ingredients also disposed of that year.

THG’s take

For THG, the acquisition enables it to bring ’in-house decades of product know-how and innovative resource’ in the formulation snack bars. It will also help to reduce lead times for NPD, it added.

Matthew Moulding, executive chairman and CEO of THG added: “We are delighted to announce our first major acquisition within THG Nutrition in 2021. Brighter highly complements our developed vertical integration strategy and strengthens our capabilities in the growing convenience and snack bar market. Nutritional bars are a high growth category for THG, with significant product extension opportunity across all our brands.

“The Brighter team bring a wealth of bar manufacturing and product development expertise, and in line with the Claremont and Berryman’s acquisitions, enables THG to significantly accelerate the launch of further product innovation into global markets, while increasing the proportion of THG Nutrition products wholly manufactured in-house.”