Kettle acquisition first step in larger food group?

The deal, which is understood to be worth more than £50m, would see the group acquire its first crisp manufacturer and would pave the way for a new snacking division for the Irish firm.

Julian Wild, corporate finance director at Rollits, said: “Valeo is backed by CapVest, which clearly has significant funds available and is looking to grow a large food group, presumably with a view to floating it at some stage.”​

£50m ‘realistic’ ​

Wild said the £50m price tag for Kettle was a realistic figure, considering the price PepsiCo paid for snack manufacturer Pipers late last year – £20m in November.

“Valeo apparently see Kettle as still being a premium brand – correctly in my view – with a strong reputation,”​ he explained. Despite this, Kettle faced stiff competition in the snacks market, especially from a wave of healthier snacks currying the public’s favour in the wake of the demonisation of ‘ultra-processed’ foods.

However, Valeo seemed to be invested in breaking into the premium snacks market through Kettle, despite a less-than-stellar result in its mid-year financial reports.

Turn Kettle around​

“Kettle made a loss of over £4m on £51m turnover in the seven months to July 2018,”​ said Wild. “But it is a £90m turnover business with a good brand and Valeo obviously thinks it can turn it around.​

Clive Black, senior analyst at Shore Capital, added: ​“While we cannot corroborate stories in the press, given the spread of Valeo’s activities – which include proprietary brands – it is not inconceivable that Kettle Foods, which has been subject to considerable ownership change, could be on their radar. Time will tell.”​

It is unknown what plans Valeo has for the snack manufacturer after the purchase, but an acquisition would see at least 492 new employees taken under its wing – 411 production staff and 81 working in administration.

Valeo’s acquisition of Kettle would be the latest in a stream of food and drink business purchases by the company in recent years, adding to its growing stable of snack brands – including Jacobs and Kelkin. It purchased Tangerine Confectionery’s five UK factories and candy brands​​ in August last year, eight months after its acquisition of Raisio’s confectionery business for £88.6m.

Campbell, Kettle Foods’ owner, was reportedly seeking a buyer for the business in May, two years after it acquired the businesses as part of the Snyder’s-Lance portfolio of brands.

Valeo owner Capvest declined to comment on the proposed deal.