Endless buys Hovis from Gores, Premier Foods

The deal values the company at around £100m, which equates approximately to 6.5x its 2019 EBITDA, Unquote understands.

Endless invested in the business via its Endless Fund IV, which closed on £525m in December 2014. In addition to the equity from the fund, PNC provided a debt package to support the deal, Unquote understands.

Gores, which controls a 51% stake in Hovis, appointed Baird to handle the sale process in June 2020. In September, the British press reported that the company had attracted offers from trade, as well as turnaround and private equity bidders, including PE firms Epiris, Endless and Aurelius Equity Opportunities.

At the beginning of October, Hovis received an offer from Milan-listed food conglomerate Newlat Foods, which is the owner of Italian pasta brands Buitoni and Del Verde. However, the offer was withdrawn by the end of the month, when Endless was reported to be the frontrunner for the sale.

"We received higher interest than expected, assisted by the positive performance reported by Hovis during the coronavirus outbreak," Vinay Ghai, managing director at Baird Investment Banking, told Unquote. "In addition, the shift to online shopping stimulated by the pandemic weighed positively on the sale, especially considering that the company's well-established brand has helped it outperform the category as consumers gravitate to brands they know and trust in an online environment."

Premier Foods will receive total proceeds of £37m from the disposal, including the repayment of outstanding loan notes and accrued interest.

Previous funding
Premier Foods, at the time participated by Warburg Pincus, sold its controlling stake in bread business Hovis in January 2014 to Gores, in a deal valuing the division at £87.5m.

The business became a stand-alone joint venture between Gores and Premier, with Premier holding onto a 49% stake. Gores paid £30m for its 51% stake,  of which £15m was deferred and contingent on the future business performance.

Both Premier and Gores invested £45m in the newly launched joint venture. In addition, they committed to investing £200m over the next five years to improve operational infrastructure and boost the Hovis brand.

Company
Established in 1886 and headquartered in High Wycombe, Hovis is a baked goods and flour producer.

The business employs 2,800 people and operates eight bakery sites, its own flour mill and a distribution network spanning the UK and Northern Ireland.  

Hovis generated EBITDA of £15.4m from revenues of £334m in 2019, according to public documents.

People
Endless – Francesco Santinon (partner).
Hovis – Nish Kankiwala (CEO).

Advisers
Company – Robert W Baird (corporate finance).
Endless – Houlihan Lokey (corporate finance); Dechert (legal); KPMG (tax).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Buyouts
• UK / Ireland
• Consumer
• Endless
• The Gores Group
• United Kingdom
• Robert W. Baird
• KPMG
• Houlihan Lokey
• Dechert