Snack bar business sold at 12x multiple
Fri, 23 Apr 2021 | BUSINESS SALE
Real Good Food (RGF) has struck a deal to sell snack bar firm Brighter Foods to The Hut Group (THG) for £43 million, more than a 12x multiple of the company’s £3.4m post-tax profits. The Wales-based developer and maker of healthy snack bars, including the Wild Trail vegan cereal bar range, will join THG Nutrition.
RGF holds an 84 per cent stake in Brighter Foods’ issued share capital via subsidiary firm NBF. As a result, RGF stands to generate more than £35 million in cash proceeds from the sale.
Discussing the sale, RGF said it would deliver several benefits for the firm, representing a solid return on investment and enabling it to cut its net debt, narrow its pension deficit and provide capital to help fund future growth.
The disposal will also enable the business to focus on Renshaw and Rainbow Dust Colours, two cake decorating businesses in its portfolio. The sale is expected to close on May 11 2021.
RGF Executive Chairman Mike Holt commented: “We are very pleased with the disposal which crystallises substantial value for the Group and enables us to halve our debt burden at a stroke, whilst materially improving the funding of the pension scheme.”
“It also provides a basis for further balance sheet restructuring, as we look to accelerate and maximise value within Renshaw and Rainbow Dust Colours.”
THG Executive Chairman Matthew Moulding added: “We are delighted to announce our first major acquisition within THG Nutrition in 2021. Brighter highly complements our developed vertical integration strategy and strengthens our capabilities in the growing convenience and snack bar market. Nutritional bars are a high growth category for THG, with significant product extension opportunity across all our brands.”
“The Brighter team bring a wealth of bar manufacturing and product development expertise, and in line with the Claremont and Berryman’s acquisitions, enables THG to significantly accelerate the launch of further product innovation into global markets, while increasing the proportion of THG Nutrition products wholly manufactured in-house.”
In its most recent reports at Companies House, for the year ending March 31 2020, Brighter Foods reported post-tax profits of £3.4 million, up from £2.16 million a year earlier. This was generated on revenues of £25.5 million, up from £15.1 million in 2019.
At the time, the company reported total assets less liabilities of close to £14.5 million and total equity of £13.8 million.
Cereal and snacking bar companies have become attractive acquisition targets in recent years, as consumer snacking habit become more self-conscious. Earlier this year, protein snack bar brand Grenade was acquired by Mondelez for £200 million, while in December 2020 cereal bar maker Eat Natural was snapped up by confectionery giant Ferrero for an undisclosed sum.
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