Sector News

Bakkavor names new chairman ahead of $2bln float

October 4, 2017
Consumer Packaged Goods

Ready meals supplier Bakkavor plans to name a former boss of toy shop Hamleys as its new chairman in preparation for a London listing that could value it at up to 1.5 billion pounds ($2 billion), a source close to the matter told Reuters.

The company, which counts Marks & Spencer and Sainsbury’s as major customers for its sandwiches, salads, dips and ready meals, hired HSBC and Morgan Stanley earlier this year to lead its initial public offering (IPO). Barclays, Citigroup, Rabobank and Peel Hunt are also working on the deal.

The company’s IPO announcement could come as soon as next week, the source said.

Lydur Gudmundsson, one of the two Icelandic brothers that founded the business 31 years ago, intends to step down as chairman ahead of the float and will be replaced by Simon Burke, according to the source.

The change of chairman could be disclosed at the same time as the listing plans, the source said, but also warned the timings of the announcements could change.

Gudmundsson holds a stake in Bakkavor with his brother Agust, who is chief executive of the company.

Gudmundsson will relinquish the chairmanship to ensure that Bakkavor, which is Britain’s largest hummus maker, meets the U.K.’s corporate governance code that calls for an independent candidate to hold the role of chairman.

Burke is already familiar with Bakkavor, having been appointed to its board as a non-executive director in December.

The former accountant was previously the chairman and chief executive of Hamleys, the world’s oldest toy shop which under his leadership was sold to Icelandic firm Baugur in 2003. Baugur later collapsed and Hamleys is currently owned by Chinese retailer C. Banner.

Bakkavor generated revenues of almost 1.8 billion pounds and pre-tax profits of 63.1 million pounds last year.

It started as a cod roe manufacturer and exporter before the Gudmundsson brothers expanded the business with acquisitions financed with debt, borrowings that meant the company became engulfed in Iceland’s financial crisis.

Its founders, dubbed the Bakka brothers in Iceland, saw their stake in the company cut during Bakkavor’s subsequent financial restructuring.

But the tycoons partnered with U.S. hedge fund Baupost last year in a deal that saw them retake control.

In 2014, Lydur Gudmundsson received a partially suspended prison sentence after he was found to have technically broken Icelandic company law during the 2008 crisis while he was chairman of Exista, an investment firm that held a stake in Kaupthing, the failed bank. He served his sentence by undertaking three weeks of community service. ($1 = 0.7540 pounds)

By Ben Martin

Source: Reuters

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