Clive Black of Shore Capital told Food Manufacture that this deal wasn’t unexpected. “The disposal of 2 Sisters' Red Meat business has been expected for a little while as Ranjit Singh seeks to engineer a little more focus into his food group whilst also reducing ongoing indebtedness; this disposal follows on from the sale of Goodfella's pizza to Nomad Foods. As such it is a welcome development in his strategic business planning process.”
Black said this was a positive move for Kepak, ahead of any confusion caused by Brexit. “The acquisition brings some balance to its business from a UK customer servicing perspective, noting that Tesco is a key client of both Kepak and 2 Sisters' red meat operations. Quite how Brexit will pan out remains to be seen - the political clowns in Belfast, Brussels, Dublin and Westminster are going all out to totally balls things up - and so a direct investment in the UK red meat supply chain makes eminent sense by Kepak to our minds.”
He added that “we would expect further announcements of additional disposals of non-core activities by his company in due course”.
What’s next for disposal?
One prominent city analyst who did not wish to be named said this deal represents a “wider tidying up of 2 Sisters’ portfolio” that started with the sale of the Goodfella's business to Nomad Foods in January.
“Red meat has never been a strong area for 2 Sisters and it has been a likely disposal for some time. Boparan looks to have found a sensible home for the red meat businesses and this looks like a good deal for both sides. 2 Sisters needs to get back to poultry and chilled. Anything else is peripheral.”
The completion of the deal was announced earlier this morning (30 July).
Earlier this year, rumours surfaced over 2 Sisters’ offloading Donegal Catch, Portumna pastry business in Ireland and Holland's Pies, however 2 Sisters declined to comment on these rumours.
The analyst added that Fox’s Biscuits was a valuable but non-core business, however its estimated £350m price tag may stand in the way of a deal.