Japanese conglomerate Mitsubishi Corporation has finally agreed a deal to sell Princes, the Liverpool-based food and drink manufacturer it put up for sale 18 months ago.
Italian food group Newlat has now struck a deal worth £700m, having previously walked away from negotiations in February, citing the “challenging market environment” in the UK.
Newlat stated that the acquisition would boost its consolidated turnover to about €3bn and give it a “strong position in new categories in the UK market”. The firm already operates in numerous food categories, including pasta, dairy, and bakery products. In 2021, it acquired British food manufacturer Symington’s.
The Princes deal will double Newlat’s product category offering and help it become “one of the main multi-brand and multi-product companies in the food sector in Europe”.
Despite interest from manufacturers and private equity firms, Mitsubishi struggled to attract bids that matched its expectations. The process was hindered by a drop-off in Princes’ sales performance after the boost from pandemic-related shopping patterns faded.
However, latest figures released today show turnover at Princes rose nearly 20% to £1.71bn in the year to 31 March 2024, with an adjusted EBITDA of £100.54m.
Commenting on the deal, Chief Executive Simon Harrison said: “This is an exciting prospect for Princes, and we are delighted that Newlat share our confidence in the group’s strategic growth plans, brand strategy, operational excellence and people culture.”
The completion of the transaction is subject to the obtainment of antitrust clearances but is expected to take place by the end of July this year.
Newlat Food and its businesses will then become the ‘New Princes Group’, with Princes in the UK operating as a subsidiary.
The newly formed company will have a global operating network of 31 factories, with Newlat stating that it plans to increase the new group’s turnover to €5bn by 2030. Profit growth is also expected to benefit from a combination of cost and structural synergies.
Angelo Mastrolia, chairman of Newlat Food, commented: “We are extremely proud to have agreed this transaction, marking a crucial milestone in our growth strategy. Princes Limited is a prestigious company, and integrating its operations with Newlat Food allows us to further solidify our position as a leader in the food sector.
“The economic outlook of the new group gives us confidence in a future of sustainable growth, poised to create value for all stakeholders. The newly combined group will offer a broad range of high-quality products, addressing the needs of an increasingly demanding and diverse global market.
“This transaction enables us to enter new market segments and better serve our customers with an even more comprehensive, innovative, and unique product offering.”
NAM Implications:
- Newlat clearly have ambitions re the potential of the proposed Group.
- i.e. moving combined turnover from €3bn to €5bn by 2030.
- The key will be the need to harmonise prices & terms in order to optimise negotiation muscle without distractions.
- Meanwhile, rivals will have a brief window to cherry-pick opportunities in main categories…
