Catering Insight editor Andrew Seymour reflects on a week that has seen one of the boldest dealer takeovers in the catering equipment sector for some time.
Just when it looked like the year was in danger of fizzling away, up steps JLA to take over the Carford Group and ensure that 2014 becomes even more of an intriguing contest in the dealer channel than it was already set up to be.
It is difficult to recall an acquisition of this sort for some time. Mergers, takeovers and ownership changes have occurred, but they’ve generally involved distressed businesses or the cherry-picked assets of companies in trouble.
Here, though, there was no carcass to pick over, no business that needed fixing. JLA simply worked out who its targets were and did what was necessary to secure a readymade place at the catering equipment market’s top table.
That’s not to say it wouldn’t have come at a premium, I’m sure it did. But the West Yorkshire-based outfit is believed to be backed by strong private investors who clearly understand that its strategic and financial ambitions are better served doing things this way round than trying to plough the furrow organically.
Speculation that JLA had aspirations to muscle in on the catering equipment sector first surfaced last year, although few could have predicted just how aggressively it would go about it. The company made its first approach to Carford in March, which not only tells you the length involved in concluding deals of this complexity, but demonstrates that it is by no means something that was done on a whim.
In October this year, meanwhile, JLA quietly launched its own catering division after stating that laundry customers were increasingly expressing a desire to source kitchen and refrigeration equipment from it as well.
I doubt whether many competitors in the catering space would have felt threatened by that announcement at the time, but the subsequent acquisitions of CKM and Red Squared, and this week Carford, should certainly have forced them to sit up and take notice.
The market is now curious to see what happens next.
Has JLA’s spending spree finished? Or will it attempt to build some sort of dealer super-group with nationwide sales and engineering coverage? How will it seek to leverage the combined purchasing and manpower of the individual distributorships it has acquired in the last few months? And what aspects of its laundry model, where it has been a leader in rental solutions, will it endeavour to instil in the catering operation?
The impact that JLA’s arrival has on supplier relationships will also be fascinating to observe, especially in the longer term once JLA’s management team has had an opportunity to reflect on the business and understand its new division even better.
It is worth noting that the three catering equipment distributors it has bought (it also purchased Proton-Washrite which specialises exclusively in warewashing) all have a different set of brands they are close to. In the interests of combined buying power, it is not inconceivable to think that some sort of consolidation might take place in the future.
Additionally, you can’t help feeling that this week’s news doesn’t look good for any service agents that may have been contracted by JLA for catering work up to now. With Carford’s 70-strong engineering force to call upon, JLA now has access to a tremendous level of in-house technical resource.
I also suspect there will be a sense of nervousness among any dealers that provide kitchen services to clients where JLA is the lead supplier of laundry equipment. They might just feel their position is a little more vulnerable right now.
Somebody this week said to me that JLA’s acquisition of Carford was a “kick in the nuts to the industry”. The inference wasn’t that it was a negative development, but that it will shake up the status quo of the market and concentrate the minds of anyone that might be guilty of letting complacency slip in.
Roll on 2014…