Glisten grows M&A profile with niche deals in better-for-you snacks
- December 01, 2007
||holding company acquisition announced, December 2007
||FDS Informal Snacks Ltd (UK), owner of Snacks Unlimited and Lindum Snack Company
||Glisten plc (UK), fast âgrowing confectionery and snacks group
||new technology, niches and routes to market
||having partner to take them to next level in scale
||Snacks Unlimited makes âbaked not friedâ low âfat snacks; Lindum makes portion âcontrolled snacks for foodservice
We continue to be impressed by Glisten, which started 5 years ago as a 10 mln GBP business, a buy âout through Londonâs AIM, went on to make over 10 acquisitions, and is now a diversified snacks company with 60 mln GBP in sales. On top of that, theyâve focused on niche businesses, for which the most they paid was a P/S of x2 (Dormen). However, this deal is so âultra-nicheâ, that it looks like even Glisten is having trouble finding âmainstreamâ acquisitions now, at reasonable valuations, in better-for-you snacks.
Originally focused on niche confectionery, Glisten has adapted to consumer trends towards healthier snacking, with its acquisitions since 2004 focused on cereals, fruits and nuts, and âbaked not friedâ products. All of these deals were relatively small and niche, but now Glistenâs powers of creative deal-making have stretched to what one might call âultra ânicheâ businesses. Take Lindum â its core proposition is unique packing for portion âcontrolled packets for airline catering.
This could be another symptom of a broader malaise right now, that of over âvaluation of attractive âstand âaloneâ or scalable acquisition candidates. Okay, so these two businesses have a 2007 growth rate than can be estimated at 25%, but very a very low base indeed. On top of that, thereâs no brand equity, here; in fact, Snacks Unlimited only sells under private label and the Weight Watchers brand. How much upside is there in the technology and channels which these companies bring to Glisten ?
It could be that Glisten wanted to continue to impress the market, with its acquisitions momentum, and was tempted also be the low valuation. Glisten is a master at buying companies cheaply. Here theyâve bought a fast âgrowing business for a Sales multiple of under x0,5. Actually, the most theyâve ever paid was for Dormen, earlier this year; the princely sum of x2 Sales (including deferred and earn âout portions), for a premium fast âgrowing branded business. One wonders how they manage to achieve this so consistently.
Whatever Glistenâs secret is, the group also provides a salutary lesson in how to make a lot of acquisitions, as a small group, whilst maintaining financial health. In 2007, Glistenâs underlying sales growth is 10%, EBITDA margin is 14%, and operating cashflow is strong.