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News archive

01 January 2012

Consumer sector comment - December 2011

Happy New Year to all you. At last 2011 is finally behind us – thank goodness I hear many of you say! So, what do we think 2012 will look like particularly from an M&A perspective:
  • 2011 saw a fair amount of activity from trade buyers with the likes of MacIntosh, Genesco, Jones, Card Factory, Morrisons, SHS and Photobox all making acquisitions last year. We think the trade buyer will continue to be an active player in 2012 as they look to find growth in tough markets, consolidate market positions and access overseas markets, new business models or expertise.
  • Continued appetite from private equity particularly those funds with sound track records in consumer markets. Private equity has been active in 2011 despite debt markets continuing to be challenging. Deals involving JoJo Maman Bébé, Wiggle, Be At One, Celtic Sheepskin, Ideal Shopping Direct, All Saints were just some of the private equity deals completed last year. For good businesses who have continued to trade well despite grim trading conditions private equity continues to be interested in investing, providing competition to strategic trade buyers.
  • Lots of restructuring. The December rent day has already brought a number of administrations, more are publicly rumoured and many more are being discussed privately. The first few days of January will see significant activity. While no-one wants to see businesses go into administration this is also an opportunity – poorly configured businesses with far too much debt need to be restructured in order to provide a platform for future growth and success. Whilst inevitably some businesses will disappear many others will be able to use a restructuring event to create a phoenix that will rise from the ashes.

So what does that mean for managers and owners? There will be M&A opportunities in 2012 and getting some early advice is vital!

And finally, will it be a better year for trading conditions? A personal view rather than a Clearwater one – I’m an optimist so a tough first half and a better second half. If we can get to the summer without a major European crisis then I think the second half will be better driven in part by the Olympics, lower inflation, summer weather (possibly!) and the jubilee. But consumer businesses will need to work hard to have compelling products, pricing and service if they are going to succeed in getting the consumer to spend.

Deals


Jacques Vert Plc has signed a definitive agreement to be acquired by Sun Capital Partners Inc. Jacques Vert Plc, the listed UK based company headquartered in London, is a women clothes manufacturer. The acquisition will provide Sun Capital with greater scale and penetration in the apparel segment of the retail market while also adding new and complementary brands to its portfolio of retail and apparel companies.

Sun European Partners, LLP has agreed to acquire American Golf Discount Centre Limited, the UK based retailer of golf equipment and accessories, from Lloyds' TSB Development Capital (LDC) for an undisclosed consideration. Sun European Partners hopes to expand American Golf business in the future since it has been performing well with the help of LDC. American Golf was acquired by Lloyds' TSB Development Capital in 2004, where LDC invested for a majority shareholding.

JJW Hotels & Resorts, the luxury hotel and resort operator, a subsidiary of MBI International & Partners, has acquired The Scotsman Hotel Group Limited, for an consideration of £40m. The acquisition was backed by a private investor Sheikh Mohamed Bin Issa Al-Jaber, the chairman of MBI International.

Patron Capital Limited, the UK based private equity firm and Halcyon Hotels and Resorts plc, an UK company develops, owns, acquire and operates hotels, have acquired The Ickworth Hotel Limited, Moonfleet Manor Hotel Limited, Thornbury Castle Hotel Limited, New Park Manor Hotel Limited, The Elms, Fowey Hall Hotel Limited and Woolley Grange , for a total consideration of £40.5m. The acquisition will enable Halcyon Hotels and Resorts with excellent opportunity to support an iconic brand and series of properties. Post acquisition, the acquired hotels will be managed by the Halcyon Hotels and Resorts team, led by Nigel Chapman under the Luxury Family Hotels brand, except for Thornbury Castle.

Boyne Valley Limited, the Ireland based retail chain, has agreed to acquire Chivers Ireland Limited, the Ireland based jam and jelly producer, Erin, the Ireland based soup brand and soup producing company, Gateaux, the Ireland based cake and baked goods manufacturer, and McDonnells, the Ireland Ireland based noodles and curry producer, from Premier Foods Plc for a consideration of €41.1m. The transaction is in line with Premier Foods' strategy of focusing and supporting the main products portfolio. The company intends to restore profitable growth. Boyne Valley expects to benefit from the target's future growth opportunities. The acquisition will be complementary in connection to the existing bidder's products portfolio of olive oil, relishes, home-baking and honey.

Premier Foods Plc has agreed to sell its Brookes Avana business to the Boparan Group. Brookes Avana is a supplier of chilled convenience products that consists of Avana Bakeries and RF Brookes businesses. The Boparan Group, the UK based company headquartered in Smethwick, is a processor and supplier of chicken products for the retail, foodservice, and food manufacturing sectors through the subsidiary, 2 Sisters Food Group. 2 Sisters Food group believes that the transaction is a strategic fit and would enable the company to expand their offerings in the Chilled and Bakery markets.

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