The private equity firm, with offices in London and New York, bought the company, which has its headquarters in Nottingham and employs 2,000 people, in January 2007. It began a strategic review to explore investment options for Pork Farms last year.
Now FoodManufacture.co.uk understands it is exploring the possibility of selling the business, which operates from four sites. These are: Riverside Bakery And Queen's Drive in Nottingham; Palethorpes in Market Drayton, Shropshire; and Shaftesbury in Dorset.
“It lost money until two to three years ago and is now in a state where they could consider selling it (for the first time),” one industry expert told this site. “Private equity always looks to sell in under five years so this one has outstayed its welcome.”
However, he said any sale would be a challenge. “In my view it’s not at all an easy sell. All the factories are quite old, it’s not a high growth category and the business has only got back into profit in recent years by taking cost out.
‘Competing against some of the best operators’
“It’s competing against Samworth [Brothers], Cranswick [Foods] and Tulip, which are some of the best operators in the business.”
He did not rule out a private equity-backed management buyout of Pork Farms or a direct private equity acquisition.
But he said he thought a trade buyer was unlikely, because any approach from the food industry would likely have been made earlier when the business would have had a lower value.
“We engaged McQueen last year to help us look at a range of strategic options to help us finance continued growth, including refinancing, buying property back and further investments in the business,” said Pork Farms in a statement.
“As a private equity-owned company, we will obviously be sold at some point, but our management team is currently focused on continuing the growth of the company. Beyond that, we don’t comment on rumours or speculation.”
It is not known if any tentative approaches to Pork Farms have already been made and, in any case, a sale could only go ahead if Vision received a favourable offer.
McQueen to advise
Vision Capital has chosen McQueen to advise on the potential sell-off. The London-based corporate finance advisor acted as sole financial advisor to Langholm Capital during its sale of crisps manufacturer Tyrrells to Investcorp in August.
In 2012, McQueen also advised Premier Foods on the sales of its vinegar and sour pickles concern to Mizkan Group and its Elephant Atta ethnic flour outfit to Associated British Foods.
On the basis of current estimated turnover and pre-tax profit, one source said any offer would have to be in the region of at least £60M.
Earlier in the year press reports claimed Vision Capital was in the process of buying back the freeholds on Pork Farms' four sites, which it had sold and leased back in an effort to reduce debts.
Meanwhile, Pork Farms has been short-listed for two Food Manufacturing Exellence Awards. Its md Chris Peters said recently he expected the firm to outstrip market growth for the fourth consecutive quarter.