Glenboden M & A Originations

Glisten continues its acquisition drive with Dormen premium snacks deal

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Origination Status company acquisition announced, September 2007;
Asset Dormen Foods Ltd (UK), fast –growing premium savoury snacks producer;
Buyer Glisten plc (UK), fast –growing confectionery and snacks group;
Seller founders of Dormen;
Buyer Rationale creation of Premium Savoury Snacking Division;
Seller Rationale attractive valuation, timing;
NBs without earn-out P/S drops to 1,8 and without deferred payment P/S down to 1,3
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Glisten is a compelling case of how a company can start off as a 10 mln GBP business, get a listing on an AIM exchange, make eight acquisitions, grow six –fold, and become a diversified foods group with three divisions; all in the space of only five years. It’s also a lesson in how to adapt quickly to changes in consumer demand, towards a ‘better for you’ snacks portfolio. Anticipate more acquisitions from Glisten, with a similar theme to that of Dormen, in the near future.

Originally focused on niche confectionery products, Glisten changed its acquisition focus in 2004, to respond to the trend to healthier snacking, and created a Natural, Cereal and Fruit Snacks Division, on the basis of two new acquisitions. With this deal with Dormen, it now has added a third division, Premium Savoury Snacking. So, you could say they started with unhealthy confectionery, then went into healthier sweet snacks, and now healthier savoury snacks. Quite a ‘three-legged’ approach.

Also interesting that, although some of the companies acquired, especially the healthier ones, could be in the ‘new frontier’ category, Glisten generally hasn’t overpaid; Dormen is the first time they’ve valued a business above a sales multiple of 2, and that includes deferred and earn –out portions. Seems very reasonable, for a premium branded business, that’s set to grow by 30% this year, and is profitable. Impressive also that the earn-out is only 15% of the total consideration, yet it allows Glisten to keep Dormen’s founders’ talents until 2009

At the same time, Glisten has not neglected organic growth or profitability, as some groups do that grow at a great, debt –fuelled speed, through a string of acquisitions. Organic growth for the group is 10% p.a., and the EBITDA margin was a healthy 15% in the last financial year.

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Size (€ mln) 15
Sector savoury snacks
Asset Quality UK premium branded
Seller individuals
Buyer mid-cap plc
P/S 2,1
P/Ebitda n/a
Type equity value
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