Haydens and Renshaw owner Real Good Food is selling its Garrett Ingredients business to Kent Foods Limited.
Garretts, which supplies dairy, sugar and other food ingredients to UK manufacturers, has been sold for £1.8m cash. The sale is expected to complete on 20 April.
News of the deal follows a string of profit warnings by Real Good Food (RGF) in recent months, and as the business looks to secure long-term funding arrangements. The funds from the sale will be used to reduce the firm’s debt.
In RGF’s financial year, ended 31 March 2017, Garretts had an operating loss of £0.9m on revenue of £21.3m. It had net assets of £1.9m, and RGF said it expected to report a modest loss on the sale.
Describing Garretts as ‘non-core’, RGF said its board believed Garretts had more in common with Kent Foods.
Headquartered in Glasgow, Kent Foods has depots in Glasgow, Basildon, Bristol and Leeds and distributes food commodities throughout the UK, Ireland and north-western Europe. The company describes itself as one of Europe’s largest independent suppliers of sugars, sweeteners, dairy products, oils and fats to the food manufacturing industry.
“[Kent’s] skills and aptitude are better suited to managing its contracts, given Real Good Food’s resources are being increasingly focused on serving the end-consumer,” stated RGF.
"We are pleased to have agreed the sale of this small, non-core business as part of our plan to improve the group’s performance,” added RGF chief executive Hugh Cawley.