Newlat, the Italian food manufacturer, has disclosed that it is engaged in “highly advanced” discussions regarding the acquisition of Princes, the British food and drinks supplier.
In a brief statement, Newlat, which already owns UK food manufacturer Symington’s, confirmed its involvement in the race to buy Princes from the Japan-based conglomerate Mitsubishi Corp.
“Newlat Food S.p.A. confirms its participation in the competitive process for the sale of the historic English food group Princes Limited,” the statement read. “The company also confirms that the negotiation is currently in a very advanced stage.”
The statement from the bakery, dairy, and pasta supplier was issued following a Sky News report, which stated that Newlat, along with the UK-based private-equity firm Epiris, were the two remaining bidders for Princes.
In September, the news channel identified Newlat and Epiris as potential buyers for Princes, alongside financial investors Lone Star Funds, Aurelius, and One Rock Capital. On Friday, Sky News reported that the group had narrowed down to two contenders, stating that it was uncertain when a deal might be finalized and whether Newlat or Epiris were willing to meet the speculated asking price of £400 million ($502.6 million).
In January, the financial-markets news publication Debtwire reported that Mitsubishi had enlisted M&A advisers from Houlihan Lokey to oversee a sale process.
A representative from Mitsubishi stated that “no decision” had been reached regarding Princes. When questioned about whether Mitsubishi had engaged bankers to manage a potential sale, the spokesperson chose not to comment. Regarding Mitsubishi’s overall strategy, the spokesperson mentioned, “We are consistently exploring opportunities to enhance the company’s growth.”
In 1989, Mitsubishi obtained ownership of Princes, which was based in Liverpool. During that period, Princes concentrated on importing and distributing shelf-stable food. Presently, the company has expanded its product range to include edible oils and beverages.
In the fiscal year ending on March 31, 2022, Princes recorded a revenue of £1.44 billion ($1.76 billion), marking an 8% decrease compared to the preceding 12 months. The company attributed this decline to the fact that it was surpassing a remarkable surge in revenue reported in the prior year, fueled by increased demand during the Covid-19 pandemic.
The operating profit recorded was £37.4 million, a decrease from the previous year’s £47.5 million. The profit for the year, attributable to the company’s owners, saw a 50% decline, dropping from £34.8 million to £17.2 million. Princes cited factors such as reduced sales volumes, increased tax expenses, and a positive impact on the prior year’s profits due to an asset sale.
Princes operates two food factories and three beverage production sites within the UK. Additionally, the company has a tomato-processing facility in Italy and a tuna-processing site in Mauritius. Over the year ending in March 2022, the company maintained an average workforce of 6,977 full-time employees.
Princes possesses shares in Edible Oils, a British company specializing in bottled edible oils. Through a joint venture with the agri-food group ADM, Princes holds co-ownership of the business. Edible Oils operates three production facilities.
In June, Newlat announced its contemplation of acquiring another business in the United Kingdom.
The company revealed its prospective interest in another deal through a stock exchange filing that outlined new investments in its business.
In the filing, Newlat said the deal was part of its efforts to support its “external growth strategy”, which includes M&A.
The company added, “Newlat Food is currently engaged in evaluating various potential acquisitions, including that of a leading UK company with a turnover of over £1bn.”
In a statement, Newlat expressed that “Chairman Angelo Mastrolia and the entire management team are dedicated to embracing a significant strategic opportunity that can generate value for all stakeholders of the group.”