Prize Food is considering selling out for GBP100 million. The UK private label supplier is again looking for a bidder. An attempted sale to Golden Vale fell through last year and now doesn't look like the best time to restart the search. The deepening foot and mouth crisis means that food firms are focusing on their existing businesses, not looking for acquisitions. In these conditions, it could well take some time to find a
buyer.

Spun off from Booker in a management buyout, Prize Food has become firmly established on the shelves of British supermarkets in the three years since its inception. Now, the private label supplier is tired of life by itself and has once again started looking for a buyer. UBS Warburg has been hired to find bidders, either trade or financial, and examine the conditions for a sale.

Private equity firms including 3i and Bridgepoint, which financed the buy-out in 1997, are looking to realize their investment. The deal is expected to be worth around GBP100 million, roughly five times earnings before interest, tax, depreciation and amortization. The business had sales in 1999 of GBP164 million and an operating profit of GBP12 million. Despite the foot-and-mouth crisis, Prize is still expected to announce improved results when it releases its 2000 sales figures. Although the meat pies and sausages division has suffered from the outbreak, having increased difficulty obtaining meat supplies, this is not expected to significantly impact figures. The rest of the groups divisions: frozen meals, chilled ready meals, sandwiches, and potato products, are fairly well protected from the problems.

A similar attempt last year failed to find Prize Food a buyer. While talks with Golden Vale were serious, the sale eventually fell through last November. And with many food groups suffering at the minute from lower demand and higher costs, this might be an even worse time to find a buyer.

Potential bidders are likely to be focusing on their own problems right now and trying to make the most out of difficult times. Acquisition planning may well be put on the backburner until later in the year, when companies are able to focus on longer-term issues. If Prize Food is content to sit and wait, its strong position should find plenty of interest coming along eventually.

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