UK catering group Brake Brothers effectively put itself on the market yesterday when it announced it had appointed Credit Suisse First Boston to carry out a strategic review. The move was prompted by co-founder Frank Brake’s decision to retire.
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The Brake family owns 58% of the business, which was formed by the three brothers Frank, Peter and William in 1958. The business, which started out supplying poultry to caterers and launched its frozen food distribution division in 1963, was floated on the London Stock Exchange in 1986. Following a series of acquisitions, the company now owns brand names such as Larderfresh, Puritan Maid, Watson & Philip Foodservice and M&J Seafoods.
At 68, Frank Brake feels the time has come for him to retire, and that the company has grown too large to pass on to another member of the family. He also expressed the opinion that it was important the family fortune be diversified, saying: “It is important not to have all your eggs in one basket, no matter how good the basket is”.
No schedule has been set for Brake’s exit from the business, but he said it was likely to take place in the next few months.
As for the business, analysts speculate it could fetch around £350m (US$494.7m). Depending on the strategic review, it could be sold, or could merge with another entity. UK foodservice group Compass, and Dutch supermarket operator Ahold, which has a substantial foodservice division, were mooted by the press as likely candidates to take over the group. Brake admitted he would prefer to see his group go to a trade buyer than a venture capitalist.
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By GlobalDataThe news rather overshadowed Brake’s announcement of a strong set of full-year results at the top end of forecasts – albeit the downgraded forecasts since 11 September. Sales inched up to £1.39bn from £1.13bn in the previous year, while pre-tax profits came in at £29.5m (£36.6m).
On news of the strategic review, shares rose almost 15% to 683p, their highest level in six months.
