Blog: Sometimes, I'm just not convinced
Dean Best | 23 July 2007
By our very nature, we cynical hacks are a questioning breed. However, there are times when a company’s take on a given situation is persuasive.
Take for instance, Whole Foods Market’s desire to buy rival US natural and organic retailer Wild Oats. The US competition anti-trust watchdog is fighting the takeover on competition grounds; Whole Foods, however, argues a deal would not hinder choice in the sector.
Leave aside the unseemly mess Whole Foods CEO John Mackey has got himself in with his anonymous Internet postings about Wild Oats. His argument that Whole Foods is now competing not just with Wild Oats but also with the likes of Wal-Mart is compelling.
Also, consider Nestlé’s response last week to a report that, earlier in the year, it held talks with PepsiCo over a possible merger. Nestlé came out strongly and dismissed the report, understandably pointing out that a merger with a company that makes products like Walkers crisps just would not fit with its strategy of growing its nutrition business.
More often than not, however, a company’s protestations are unconvincing. On Friday afternoon (20 July), it emerged that ailing UK baker Inter Link Foods had fallen into administration and been sold after months of profit warnings and falling sales. Inter Link’s now ex-chairman Jeremy Hamer insisted that the firm would get “a new lease of life” under its new owners, Irish food group McCambridge.
Now, Hamer had worked hard to revive the business and, naturally, wants to see it succeed. However, the path to recovery will not be an easy one. With more UK consumers looking for a balanced diet and healthier products, can Inter Link bounce back, especially in what is an ultra-competitive sector? What’s more, a large chunk of Inter Link’s business is own-label; will a change in owners really be able to help a company selling to the UK’s always cost-conscious supermarkets?
A similar feeling of uncertainty also surrounded food and ingredients group Tate & Lyle and UK retail giant Sainsbury’s last week. Tate & Lyle cheered some analysts and investors with a lucrative share buyback but, delving a bit deeper, it appears underlying problems remain at the company. Splenda, Tate & Lyle’s artificial sweetener, is under-performing, underlying profits from its ingredients business are down, while the restructuring of the EU's sugar regime has also affected the company. To be a Tate & Lyle shareholder is a bittersweet experience right now.
And at Sainsbury’s, questions remain over how a proposed takeover bid would affect the company. Qatar-backed investment fund Delta Two has promised to spend GBP3.5bn (US$7.2bn) on expansion if it bought the retailer. However, the fund has admitted it would need to borrow GBP6bn to secure a takeover. The prospect of that much debt being placed on Sainsbury’s has already provoked an outcry from unions – and it is likely to throw up questions among certain Sainsbury’s shareholders, too.
Danone completed its US$12.5bn acquisition of WhiteWave Foods this week. The move will roughly double Danone's presence in North America, where WhiteWave is a top four dairy player. ...
Premier Foods plc revealed today (28 March) it has secured a deal with its pension scheme trustees that will see the UK food maker reduce its pension burden....
Hain Celestial, under the scrutiny of the investment community in recent months and facing some challenges in its domestic market, has announced another shuffling of its management pack....
FrieslandCampina, which today served up higher profits but lower sales for 2016, is ready to offload the last non-dairy business owned by the Dutch cooperative giant....
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