2 Sisters buyout secures future for red meat and poultry sites
Vion UK has found a buyer for its red meat and poultry businesses, securing the future of processing sites crucial to the future of British beef, lamb and poultry producers.
Poultry processor 2 Sisters Food Group has purchased the company’s red meat and poultry processing sites, with the exception of the Welsh Country Foods plant in Anglesey, north Wales.
Vion’s chicken agriculture and rearing division was also excluded from the sale. However, the company says an agreement has been reached in principle to secure the future of the sites, but the buyer is not being disclosed at this stage.
All of Dutch-owned Vion’s UK business has been up for sale since November 2012, when the company announced plans to exit the UK meat processing industry.
The pork business was the first to go in December 2012, when a management buyout, backed by private equity firm Endless and led by former managing director of the pork unit Seamus Carr, was confirmed. The newly formed company is called the Karro Food Group.
The latest deal, involving 2 Sisters, comprises 11 processing sites, which employ approximately 6,000 employees across Scotland, England and Wales.
“These businesses will help us to shorten the supply chain for consumers and meet growing demand for British-sourced food. Our immediate focus will be to improve performance, as we have successfully done with our previous acquisitions,” said 2 Sisters chief executive Ranjit Singh.
Previous acquisitions include the then loss-making Brookes Avena, which was bought from Premier Foods in December 2011. The company returned to breakeven status in autumn last year.
It was too early to talk about future plans, but 2 Sisters hoped the deal would help it build its business, as it was buying additional meat processing capacity to meet demand, a spokesman said.
Work was needed to improve performance on the units, and the focus in the future would be meeting customer demands, particularly those of retailers who had committed to sourcing more British meat.
Analyst Clive Black from Shore Capital said the deal would bring a sense of relief to farmers, particularly those in Scotland and Wales.
“Quite how 2 Sisters will manage the business remains to be seen, as there could still be quite a lot of change in terms of making the business more efficient,” he said.
Both NFU and NFU Scotland welcomed the news and said they would be meeting with 2 Sisters in the near future to discuss the company’s plans for the Vion sites.
However, the Farmers’ Union of Wales expressed concern the Welsh Country Foods plant in Anglesey had been excluded from the sale.
The Gaerwen plant, which employs 360 people and handles 640,000 lambs a year, entered into a 90-day consultation period in January when it lost a key supply contract to Asda, which accounts for 50% of the site’s business.
The poultry sites acquired by 2 Sisters Food Group are: Coupar Angus and Cambuslang in Scotland; Llangefni and Sandycroft in Wales; and Basildon, Witham and Eye in England.
The red meat sites are McIntosh Donald and St Merryn Foods.
Philip Clarke, Poultry World editor, comments
Industry reaction to the news that 2 Sisters is buying Vion’s remaining meat businesses has been one of relief that the uncertainty is over. The fact that 2 Sisters is a British company with an ambitious and competent management team is an added bonus.
For, while Vion struggled to make ends meet and failed to invest, 2 Sisters has been steadily upgrading, diversifying and expanding.
The timing is also fortuitous – coming just days after Tesco announced plans to up its sales of British produce. The fact that 2 Sisters is the major supplier to Tesco seems more than mere coincidence.
But the assertion that the takeover ends the uncertainty is wishful thinking. Question marks remain over whether there will be a Competition Commission referral, what will happen to Vion’s farming businesses, and whether parts of the processing business will be discarded.
The proposed deal closes a chapter, but the story has a long way to run.
The sites acquired by 2 Sisters Food Group are:
VION UK poultry
- Scotland – Coupar Angus and Cambuslang
- Wales – Llangefni and Sandycroft
- England – Basildon, Witham and Eye
VION UK red meat
- Scotland – McIntosh Donald at Portlethen
- Wales – St Merryn Foods at Merthyr
- England – St Merryn Foods at Victoria and Bodmin
Vion confirms pork management buyout
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