Ed’s view: The takeover show

It’s been a breathless couple of months for buyouts in the catering equipment sector, as consolidation continues apace.

January saw both the Lockhart acquisition of the Aggora Group and Dunstable-based Advance Group enter the takeover fray with its purchase of nearby Prestige Catering Equipment. Coupled with Unitech Group’s controversial buyout of the insolvent Francis Catering Equipment last September, the distributor market is shaping up to comprise of fewer, larger players.

There are really only a few dealer groups who can now afford to go on an acquisitive run, and with Advance hitting £18.1m turnover for the 2016-2017, this has enabled it to join the giants of the industry such as Airedale, Lockhart and Nisbets in fishing for distributors to scoop up, though chairman Steve Coates was at pains to emphasise that Advance’s model is to buy and build businesses with their existing owners rather than full integration.

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What’s interesting about the Lockhart Aggora deal is that Aggora itself topped a £26.7m turnover in 2016-2017, giving it well enough financial muscle to set about acquisitions itself, but founders Simon Pointon and Doug Thewlis clearly feel that getting Lockhart’s considerable backing is the best move going forwards.

Another member of this exclusive club is Rippondon-headquartered JLA, which went on a well-publicised dealer buyout spree, acquiring seven distributors in an 18-month period, including Carford, Comcat Engineering and Newco Catering Equipment. However, the servicing specialist changed tack with its latest purchase, dipping a toe in manufacturer waters with its takeover of DC Products.

Therefore it looks like we are increasingly in the age of the ‘super distributor’, with very clear definitions as to which huge groups can offer which types of services. Whether JLA’s DC buyout signals a merging of more manufacturer and distributor businesses to form a full cradle to grave commercial kitchen offering remains to be seen though.

But I would bet that there are a few independent distributor owners approaching retirement who are eyeing up these deals with interest. If there is no direct succession plan within a company, then a buyout is a good way of ensuring the continued success of the business.

However, all industries have a cyclical nature and it may be that these latest unifications will create room for smaller players to offer a nimble and independent service as a contrast to the big beasts who may not be able to be as reactive any time there is a significant sector shift. There should be room for all types.

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