Red Mill Snacks

Deal Summary

Catalyst advised the shareholders on the £22 million sale of Red Mill Snacks to Tayto, a business based in Northern Ireland.

Red Mill Snacks is the third largest crisp and snack business in the UK and one of the leading suppliers of branded snacks. The company employs more than 300 people in two plants at Wednesbury in Birmingham and Westhoughton near Bolton, producing over half a billion bags of snacks a year.

Red Mill is best known for the market leading pork scratchings brand, "Mr Porky" and the "Transform-a-Snack" brand, whilst it also manufactures a range of private label tortilla chips.

What difference did we make?

The shareholders of Red Mill recognised there would be a limited buyer pool for the business and that to achieve their value aspirations they would need to sell to either a competitor, who could achieve synergies and be persuaded to pay for them or an international strategic purchaser. Therefore, they understood their advisors needed to be able to move away from a standard process and have the ability to engage with very knowledgeable and price conscious acquirers.

Our food sector knowledge and track record of accessing strategic, often overseas, acquirers and selling businesses in solus or very narrow processes, often to competitors, fitted their criteria exactly. We delivered two preferred bidders - a Mexican/US based billion dollar listed food business and the Northern Ireland based Tayto Group, owner of the Golden Wonder brand who were a major competitor of Red Mill. Due to a number of market issues, not least increasing raw material commodity prices and UK retailer behaviour, we advised the shareholders to focus on Tayto Group as a buyer because they would understand the issues and had synergies available to protect the price offered.

This deal brought the usual challenges of selling to a competitor and securing some of the purchaser's synergy value in the price. These challenges were overcome by demonstrating fully the synergies available to the purchaser and robust negotiation and controlled release of commercially sensitive information. This ensured that Red Mill would not be compromised if an acceptable deal was not reached.