UK manufacturer 2 Sisters Food Group has sold part of its Fox’s Biscuits business to an affiliate of Italian sweet-snacks giant Ferrero for GBP246m (US$317.8m).
2 Sisters announced this morning (7 October) a “Ferrero-related company” will buy two Fox’s manufacturing sites that primarily produce biscuits sold under the Fox’s brand.
A third factory that manufactures own-label biscuits for “major retailers” will stay in 2 Sisters’ hands.
The transaction was carried out through CTH, a holding company fully owned by the Nutella owner’s executive chairman Giovanni Ferrero.
UK broadcaster Sky News last week reported Ferrero was working with advisers on drawing up an offer for Fox’s.
Ferrero is to buy two factories in Batley and in Kirkham in northern England. The third site, in Uttoxeter in the English Midlands, remains in 2 Sisters’ ownership.
In the UK, Ferrero markets spread brand Nutella and its range of confectionery including Kinder, Thorntons, Tic Tac and Ferrero Rocher.
Last summer, CTH snapped up Denmark-based snacks business Kelsen, owner of brands including Kjeldsens Butter Cookies, from Campbell Soup Co. for US$300m. Four years ago, CTH acquired Belgian biscuits business Delacre.
In April last year, Ferrero struck a deal to buy a clutch of biscuit and snack brands in the US from Kellogg for US$1.3bn. That purchase followed a series of acquisitions by Ferrero in North America in the previous two years.
Ranjit Singh, the president of 2 Sisters parent company Boparan Holdings, said: “Fox’s Biscuits has always been an attractive brand and as one of only two major independent biscuit makers in the UK, it is a prized asset in this market.
“We have listened to many interested parties over the years, but we have always been clear that Fox’s would only be sold to the right new home, at the right time and for the right value. This sale represents another significant deal for us, underlining our commitment to our business turnaround. It strengthens our balance sheet even further and shows we are following through with our promises to focus on our key strengths. I wish all colleagues at the two Fox’s Biscuits sites every future success with an ambitious new owner.”
Boparan Holdings acquired Fox’s Biscuits as part of its purchase of UK manufacturer Northern Foods in 2011. Three years later, the first speculation emerged over the future ownership of Fox’s and rumours have since swirled on and off.
The deal is the latest disposal by 2 Sisters, which over the last couple of years has offloaded its Matthew Walker Christmas puddings arm, seafood business Donegal Catch, its Goodfella’s pizza assets, its red-meat operations and the Manton Wood sandwich unit.
The company is now left with three main retail assets: poultry, which includes private label as well as branded products, the own-label Fox’s assets and Holland’s Pies.
In July, Boparan Holdings provided a trading update – the company’s fourth quarter ran for the 11 weeks to 11 July – in which the company said it was continuing to “implement its strategy by further simplifying its structure, aiming at ultimately becoming a poultry-focused business”.
Ronald Kers, the CEO of Boparan Holdings, said today: “This sale is in line with our strategy and is further good news as we build on two years of strong turnaround momentum and continue to focus on our core business. It strengthens our liquidity position and reduces our leverage ahead of our planned refinance of the business.
“We believe the sale to Ferrero is not only beneficial for 2 Sisters Food Group, but it means a positive future for the Fox’s brand with an owner who has a compatible culture and a global reputation for high-quality branded chocolate and biscuit products.”
just-food has contacted Ferrero for comment.
In the most recent, publicly-available set of annual accounts for Boparan Holdings, covering the 52 weeks to 27 July 2019, its turnover was GBP2.74bn, down from GBP3.34bn a year earlier, with the company pointing to its disposals. Sales in Boparan Holdings’ “core businesses”, it said at the time, were “strong”.
Boparan Holdings made an operating profit before exceptional items of GBP4.5m – versus GBP22.1m a year earlier – and a loss before taxation of GBP17.5m, compared to GBP5.9m the year before. The company’s net debt stood at GBP631.4m, up GBP601.8m 12 months previously.