Troubled chilled foods firm Bakkavör could be target for takeover, say financial analysts
Shore Capital analyst Darren Shirley told FoodManufacture.co.uk: "It was not unreasonable to assert…Shore Capital analyst Darren Shirley told FoodManufacture.co.uk: "It was not unreasonable to assert that Bakkavör might feature in industry reorganisation." He said the firm was in a similar position to Northern Foods a few years back. 2 Sisters Group acquired Northern in 2011 for £342M.
However, Julian Wild, food group director for legal firm Rollits, poured scorn on such speculation. He argued that, although the Icelandic firm was still plagued by a high debt burden, the peak of its problems came a few years back with the financial crisis that hit the country. Since then, he added, Bakkavör had made progress to reschedule its debt and restructure, including closing unprofitable sites.
Most recently, reports emerged that the two Icelandic entrepreneurs who founded Bakkavör were interested in acquiring up to a quarter of the group's shares as part of the financial restructuring plans.
In March Bakkavör closed its English Village Salads plant at Newport in Yorkshire, with the reported loss of 140 staff. This followed Asda's decision to take part of its salads supply in-house.
However, in April, Bakkavör opened a new facility at its Caledonian Produce site in Bo'ness, West Lothian, which created 120 jobs making nut-based products for Marks & Spencer. At the same time, it began financial restructuring talks with its lenders. It is reported to have a syndicated bank facility of £380M.
Shirley told FoodManufacture.co.uk Bakkavör's debt was 4.5 to 5.5 times earnings before interest, tax, depreciation and amortisation.
