The UK subsidiary of Swiss food behemoth Nestlé revealed plans to sell its ambient food division, which includes brands such as Crosse & Blackwell, Branston Pickle, SunPat peanut butter and Rowntree’s jelly, a move that will cost the UK over 100 jobs.
No buyer has yet been found for the business, which posts an annual turnover of around £100m (US$141.4m) and has been valued at between £80m and £120m, but analysts were not surprised by the announcement. Nestlé is increasingly focusing on four key divisions in the UK; chilled dairy, confectionery, beverages and milks & nutrition.
Alastair Sykes, chairman and CEO of Nestlé UK, commented: “The acquisition will strengthen our position in a key category and represents an exciting opportunity for the future.
“We will now be entering into a period of consultation with all of those affected and their representatives at the different sites. We are seeking to find a potential purchaser as quickly as possible […] thus minimising any uncertainty for our employees.”
Nestlé is expecting to sell just two out of the division’s three factories, at Hadfield and Middleton. The remaining plant in Aylesbury, Buckinghamshire, will close later this year with the loss of 114 jobs.
In a press release, the company explained: “The [Aylesbury] factory manufactures dehydrated products [and] as a result of the proposed sale these products would no longer be manufactured at Aylesbury.
“Any remaining products can be sourced from elsewhere.”
Sykes insisted however, “at Aylesbury, we are committed to providing every possible support to help find alternative opportunities for our employees, such as job shops.”
In a separate move, the company has also revealed the proposed £145m acquisition of chilled dairy desserts business from Hull-based Northern Foods. The business includes the Ski yoghurt and Munch Bunch fromage frais brands.
Some analysts have expressed surprise at the sale, which seems to be a good deal for Northern Foods. One told the Daily Telegraph: “It’s a better deal than you might have thought. It certainly looks like Nestlé approached them. The division wasn’t up for sale.”
Nestlé explained that the acquisition is intended to boost its position in the fast-growth chilled foods category: “When combined with our existing operations in this area this would create a powerful new business with total sales of £125m and 13% of the UK chilled dairy market making us a clear number 2 in this market.
“We anticipate that this will be completed by spring 2002 and will form part of Nestlé’s recently established European Chilled Dairy Business Unit.”
Proceeds from the sale will be used to reduce Northern Foods’ debt, said the company’s chairman Lord Haskins, which was calculated at £436m last September. At least some of the £54m profit from the sale could be returned to shareholders, however, the company hinted.
The purchase includes Northern Food’s yoghurt making facility at Cuddington in Cheshire, and will involve around 300 jobs moving across with the factory.
Nestlé Ireland also revealed today that it will be restructuring to focus on its core coffee and confectionery businesses, and the development of new growth opportunities.
The group proposes to sell its ambient food business, which comprises household name brands Fruitfield and Chef, and its non-core confectionery ranges including Silvermints, Yorkshire Toffee and Double Centre confectionery range. Nestlé’s Ireland factory at Tallaght, Dublin where these products are manufactured, is proposed for inclusion in the sale.