Glenboden M & A Originations

Uniq looking vulnerable after divesting its Belgian salads business

Priority Rating priority rating 2
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Origination Status unconditional subsidiary divestment announced, November 2006
Asset chilled salads business of Uniq Belgium NV, ‘Johma’ and ‘Hamal brands plus private label
Deal Type
Buyer Gilde (Holland), Benelux investment group
Seller Uniq plc (UK), European chilled and frozen foods producer
Buyer Rationale MBO opportunity, attractive valuation
Seller Rationale portfolio refocusing on areas with restructuring potential, debt reduction
NBs within a month of this deal, Uniq also divested its French spreads business, St Hubert
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Uniq grew out of the old Unigate business, and has transformed itself from a UK dairy company to a European chilled value-added business. Its strategy has been to ‘crystallise’ the value created in two of its business units, namely Uniq Belgium and St Hubert in France (reviewed separately); by divesting them; since then the focus is on adding value to the group’s other, upcoming business units. This is a challenging strategy because the business it’s keeping are in convenience foods, which have been adversely affected by commodity prices and consumer trading –down. The group’s recovery plan now targets the reaching of ‘industry average’ margins only in 2010.

Although limited to the relatively small Belgian market, Uniq Belgium is an attractive business with healthy profitability (operating margin of 12%), sales growth of 13% including acquisitions in 2006 (2% underlying), and a strong market position including leadership in the branded spoon-out salads (sandwich fillers) segment.

So, depending on how big private label is in total sales, one could say that the valuation is at a discount to comparative transactions, certainly much cheaper that the St Hubert divestment. On the other hand, Uniq concluded that they couldn’t add more value to this small and possibly niche business, and there might not have been other buyers for it. In addition it’s an MBO, potentially with no synergy opportunities for the buyer.

Gilde is a private equity firm with a very broad portfolio, including IT and healthcare divisions. It does however have several food businesses within its buy-out funds, and is heavily weighted in companies located in Benelux countries. So, not a surprise buyer.

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THIS LEAD'S VALUATION
Size (€ mln) 60
Sector chilled salads
Asset Quality Belgium branded /PL
Seller mid-cap plc
Buyer private equity
P/S 1,1
P/Ebitda 7,0
Type business unit
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