WINNER - UK


DEAL: Mizkan Group acquires vinegar and sour pickles business of Premier Foods for £41m


NAME: Shaun Browne COMPANY: McQueen POSITION: Managing Director and Co-Founder ADDRESS: 50 Pall Mall, London SW1Y 5JH TEL: 0207 484 8800 EMAIL: shaunbrowne@mcqueenltd.com


BIO:


Shaun Browne is Managing Director and co-founder of McQueen, the leading Corporate Finance adviser to the Consumer sector.


Shaun qualified as a Chartered Accountant with PwC, before joining HSBC in Equity Capital Markets. In 1995, he established and became inaugural CEO of HSBC’s corporate finance business in India, returning to London in 1999 to lead HSBC’s activities in Food & Drink corporate finance.


In 2002, he formed McQueen, which has grown to become one of the largest Consumer M&A teams in Europe, with a headcount of nearly thirty. Within McQueen, Shaun specialises in the Food & Drink sector. He has worked on all the Food & Drink deals on which McQueen have advised. This includes transactions for clients such as William Morrison, Baxters, Premier Foods, Complan, ABF, Kerry Foods, Dorset Cereals, Dairy Crest and many others. He works extensively with private equity firms interested in the sector and has recently advised, amongst others, Blackstone on their investment in Tangerine Confectionery and LDC on their investment in the ComplEat Food Group.


DEAL OVERVIEW:


McQueen advised Premier Foods on the successful divestment of their vinegar and pickles business in Middleton, Manchester to Mizkan for £41m in July 2012. The transaction included market leading brands such as Sarsons, Dufrais and Haywards Pickles. The deal was completed very speedily, in contrast to many other deals in the market over the last couple of years. McQueen began work in earnest in early 2012, the Information Memorandum was distributed in March and the auction process was completed by June 2012.


The business was a carve out from Premier Foods, so a detailed Transitional Services Agreement needed to be negotiated, covering all the activities that were undertaken centrally by Premier Foods and not included in the business being sold. These services included procurement, some warehousing, sales, marketing and distribution along with central administrative services encompassing finance, IT, legal, HR, etc. As Mizkan had only a modest presence in the UK prior to the acquisition, this proved to be complicated and time- consuming negotiations, handled mostly by Mizkan USA.


Mizkan’s existing UK activities revolved around their business in Burntwood, Staffordshire. This business was the main own label competitor to Premier Foods and was the only other UK manufacturer of malt and spirit vinegar. Burntwood and Middleton were the largest suppliers of these products to food processor customers (who use them in the manufacture of pickles and sauces), food service customers (including wholesalers and fish and chip shops) and supermarkets. McQueen


informed Mizkan from the outset that a transaction conditional on regulatory clearance would be unacceptable to Premier Foods. This proved to be a prescient decision as, post completion of the deal, the OFT announced in September 2012 that they were considering undertakings offered by Mizkan to divest its production plant in Burntwood to address its competition concerns.


A further complication arose from the fact that some of the products included in the sale were actually manufactured in a different site owned by Premier Foods, near Bury St. Edmunds, home to the famous Branston pickle. A contract packing agreement also had to be separately negotiated to cover these items, until Mizkan were able to make the appropriate physical adjustments to the Middleton site to enable the manufacturing lines to be moved to Middleton. In the event, these negotiations proved unnecessary as Mizkan were so pleased with their acquisition of Middleton that they subsequently approached Premier Foods to acquire Branston pickle and the entire site at Bury St. Edmunds. A separate deal was agreed on a bilateral basis and Mizkan are now the proud owners of Branston as well as Sarsons, Dufrais and Haywards.


McQueen used its sector skills and its international reach to identify the best buyers from around the world. Ultimately, this turned out to be Mizkan, a privately owned 8th generation family business in Japan.


Shortly after this deal was announced, Premier Foods announced the sale of their Elephant Atta flour business to ABF – a sell side mandate also handled by McQueen.


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