Private-label heavyweight Bakkavor has acquired the Haydens Bakery business from fellow UK firm Real Good Food for GBP12m (US$15.5m).
Bakkavor provides fresh prepared food – meals, salads, desserts, pizza and bread – to major retailers while Haydens bakes tarts, pies and crumbles, Danish pastries, sweet buns, yum yums and doughnuts for the same market. It also operates a same-day consolidation service for one of its major customers.
Liverpool-based Real Good Food has suffered from cash pressure for some time. In August, the company raised GBP1m in a new share offer. It said it will use the money from the Haydens disposal to cut debts.
Established in 1976, Haydens operates from two sites in Devizes, Wiltshire, in England’s south west, and has around 480 employees.
Capital investment of GBP15m over the last 18 months has upgraded equipment and infrastructure. adding significant capacity.
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Bakkavor said the acquisition of Hayden increases the breadth and depth of its desserts range, extending its offering in in-store bakery.
It said the deal supports growth in its desserts business and, combined with the on-going expansion of its facility in Newark, Nottinghamshire, in England’s East Midlands, will provide increased capacity.
Bakkavor said the deal is also expected to realise “meaningful operational synergies” by incorporating Haydens into the existing business. In the financial year ended 31 March 2017, Haydens generated GBP31.3m of revenues and was break-even at the operating profit level.
Agust Gudmundsson, the CEO of Bakkavor, said: “We are pleased to welcome Haydens to the Bakkavor Group. It is a business which shares Bakkavor’s passion for providing outstanding service, quality and value to its customers and has a reputation for supplying some of the best tasting sweet treats to the UK’s leading retailers.”
Both companies are listed on the London Stock Exchange and Real Good Food said in a statement to the exchange this morning that the cash funds received will be used to reduce its indebtedness, first settling the lending secured against Haydens’ assets (GBP2.3m), then repaying in full the outstanding term loan with the group’s bankers (GBP1.3m).
Real Good Food said the balance of GBP6m will be split between funding the group’s working capital requirements and the potential repayment of external shareholder debt.
Haydens has been part of Real Good Food since the group’s inception in 2003.
In its statement to the stock exchange, Real Good Food said: “Given the complementary nature of Haydens’ to Bakkavor’s core business, the board believes that, in line with its turnaround plan and focus on its core assets, there is greater value for the group’s shareholders through this disposal to Bakkavor than through continued ownership.”
Chief executive Hugh Cawley said: “This disposal marks an important next step in the restructuring and performance improvement of Real Good Food and is in line with our turnaround plan for the group.”