Private Equity News & Analysis

Spicy choice for WT Foods

Directors of the UK ethnic food supplier favour a buyout backed by Bridgepoint Capital.

-

The independent directors of WT Foods, one of the UK’s leading ethnic food suppliers, have recommended a £79m offer for the company. They are recommending a price of 52p, which includes any dividend that may be declared in respect of the year ending 31 March 2001.

The offer is backed by private equity firm Bridgepoint Capital. Dutch bank Rabobank International is advising on the deal.

WT Food’s management appears to be disappointed with the company’s share performance. Although profits have been up following its acquisition of Indian ready-made meal maker Noon G, this has not been reflected in the share price.

Two years ago the company did a rights issue for 52p. Seen as an unloved company in the quoted sector, the share hit a high of 60p in 1999 and fell to a low of 27.5p last year.

By contrast, pre-tax profits for year ending March 2000 was £6.7m, a 40 per cent increase for 1999 in which pre-tax profits of £4.8m were generated.

Restructured over the last five years, the business manufactures and distributes authentic ethnic foods from around the world and has an annual turnover of over £100m. Spread across seven operating sites around the UK, the group’s leading brands include Encona, Eghoyan’s, Noon and La Mexicana. Its results for the year-end to March will be announced at the end of June.

In a separate move, Bridgepoint Capital has announced that it has invested £7.5m in the purchase of NuTemp. The investment is part of the £13m acquisition by specialist hire company Longville.

Since September 1999, when Bridgepoint injected £30m into an MBI, Longville has made five acquisitions, the latest being NuTemp of the US. The private equity firm says the latest transaction has enabled the Midlands-based group to become world number one in pumping, world number two in chiller hire and number two in UK generator rental.

Commenting on the deal Alan Layne of Bridgepoint Capital said: “We set about pursuing an ambitious global buy and build strategy backing a strong management team.” He believes that the acquisition of NuTemp, together with the other acquisitions, has created “a very significant global business”.