Burton’s Biscuits was exploring the potential for buying Natural Balance Foods in order to gain a foothold in the healthy eating market, according to reports in The Telegraph.
However, the company faced competition from Kellogg and Hain Celestial, it claimed.
It was likely all three firms had good reason to pursue the healthy treat manufacturer, Julian Wild, partner at corporate finance specialist Rollits told FoodManufacture.co.uk.
“Hain Celestial is very much in the ‘healthier food’ market in the US and UK, Kellogg is in the cereal bar business and Burton’s is in biscuits, private equity-owned and on the lookout for acquisitions. So all of those are possible,” Wild said.
Private equity circling?
He ventured that private equity would also be interested, as long as there was a “backable” management team.
“Lots of private equity investors have funds to invest. A fast-growing business in a perceived ‘healthy eating’ category will always create plenty of interest,” he said.
In particular, Wild hinted that LDC, the private equity house that recently bought Seabrook Crisps, might be keen to back the venture, as it was very active in the mid-market sphere.
The first indication of Natural Balance Foods’s intention to sell came in March, when it was reported that the company had appointed Stamford Partners to “seek new investors”.
A spokeswoman for the wholefoods company told FoodManufacture.co.uk that, after 10 years, some early Natural Balance Foods shareholders were “amicably considering retirement”.
“Therefore the remaining shareholders, including founders Greg and Jamie Combs, are considering options,” she said.
Hot property
Natural Balance Foods was started in Oxfordshire by Californian-born brothers Jamie and Greg Combs in 2005. Jamie had a background in nutrition as a former fitness trainer, wrestler and pole vaulter, while his brother worked with Florida fruit co-operative Sunkist.
Ten years on, and the company’s ‘free-from’ cereal bars almost achieved a clean sweep of multiple retailer listings. They are on sale in Tesco, Waitrose, Asda, Sainsbury, Morrisons, Wholefoods, Holland & Barrett, Boots and WH Smith.
In the year ending March 31 2014, the company made £1.3M profit before tax on a turnover of £13.2M.
Strong distribution coupled with a healthy image and balance sheet makes this company an appealing prospect.
Nevertheless, Wild believed that the £60M speculative price tag was “way too high” for a business of its size.
“It sounds like a highly aspirational number,” he said. “I imagine that the current owners would hope for a figure not far removed from the turnover level because it ticks quite a lot of boxes: it has a couple of brands, is in ‘healthier eating’, and has good listings in the multiples.”