Sector News

Unilever has appetite for cut-price takeover of Graze

January 31, 2019
Food & Drink

The Anglo-Dutch consumer goods giant Unilever is leading a pack of bidders for Graze amid transatlantic interest in a takeover of the snack-food brand.

Sky News has learnt that Unilever is close to securing a period of exclusivity within which to finalise the purchase of Graze’s parent company, ND1T Limited.

Sources said that a deal with Unilever was not certain, with other suitors including Kellogg and Pepsico also having shown serious interest in recent months.

The talks involving Unilever are at a sensitive stage and could yet fall apart, one source said.

If the FTSE-100 group, whose existing food brands include Magnum ice cream and Marmite, does enter formal exclusivity, a deal could be agreed by the end of March.

Any takeover of Graze is likely to be at a substantial discount to the £300m price tag quoted in earlier reports about its auction.

One food industry source said Unilever or another bidder was likely to pay “£150m or £200m, at most” for the business, which saw sales slip 5% in the last year for which accounts have been published.

If Unilever does buy the brand, it will be one of the first deals struck under its new chief executive Alan Jope, who was appointed to replace Paul Polman from the beginning of this year.

Mr Jope had led the company’s beauty and personal care division for more than four years, and is said to be keen to pursue a selective acquisition strategy to add fast-growing brands with a strong technology-enabled platform for growth.

Any offer from Unilever for Graze is immaterial from a financial perspective, but would offer the City some clues about Mr Jope’s plans for the company.

Unilever endured a bruising year in 2018, initially announcing, and then scrapping, plans to abolish the British arm of its long-standing dual headquarters.

Graze was launched in 2008 by Graham Bosher, one of the founders of LoveFilm, and rapidly grew its subscription base.

In its most recent accounts, the parent company said it had seen “another year of strong growth in Retail Sales Value and underlying profit” in the year to February 2018.

Some food analysts are sceptical, however, about whether Graze’s existing strategy has left the company positioned for sustainable growth in sales and profits.

ND1T has been backed by Carlyle, the US-based private equity group, since 2012.

Launched in 2008 as a subscription service, Graze offers a range of nut, seed, crisp and other snack-based products.

It has since expanded into tens of thousands of retail outlets, including at Boots, Sainsbury’s and WH Smith, in the UK and US.

Harris Williams, an investment bank, is handling the sale process.

Carlyle and Unilever declined to comment.

By Mark Kleinman

Source: Sky News

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