Glenboden M & A Originations

Glisten grows M&A profile with niche deals in better-for-you snacks

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Origination Status holding company acquisition announced, December 2007
Asset FDS Informal Snacks Ltd (UK), owner of Snacks Unlimited and Lindum Snack Company
Buyer Glisten plc (UK), fast –growing confectionery and snacks group
Seller FDS shareholders
Buyer Rationale new technology, niches and routes to market
Seller Rationale having partner to take them to next level in scale
NBs Snacks Unlimited makes ‘baked not fried’ low –fat snacks; Lindum makes portion –controlled snacks for foodservice
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We continue to be impressed by Glisten, which started 5 years ago as a 10 mln GBP business, a buy –out through London’s 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, they’ve focused on niche businesses, for which the most they paid was a P/S of x2 (Dormen). However, this deal is so ‘ultra-niche’, that it looks like even Glisten is having trouble finding ‘mainstream’ 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 ‘baked not fried’ products. All of these deals were relatively small and niche, but now Glisten’s powers of creative deal-making have stretched to what one might call ‘ultra –niche’ businesses. Take Lindum – its core proposition is unique packing for portion –controlled packets for airline catering.

This could be another symptom of a broader malaise right now, that of over –valuation of attractive ‘stand –alone’ 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, there’s 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 they’ve bought a fast –growing business for a Sales multiple of under x0,5. Actually, the most they’ve ever paid was for Dormen, earlier this year; the princely sum of x2 Sales (including deferred and earn –out portions), for a premium fast –growing branded business. One wonders how they manage to achieve this so consistently.

Whatever Glisten’s 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, Glisten’s underlying sales growth is 10%, EBITDA margin is 14%, and operating cashflow is strong.

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THIS LEAD'S VALUATION
Size (€ mln) 2
Sector savoury snacks
Asset Quality UK niche unbranded
Seller individuals
Buyer mid-cap plc
P/S 0,4
P/Ebitda n/a
Type total consideration
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