Ranjit Singh Boparan’s 2 Sisters Food Group has offloaded its European poultry business to his private office in a “transformational” deal worth in excess of €200m.
The sale of the business, which trades as 2 Sisters Storteboom, to Boparan Private Office (BPO) is subject to approval by Polish anti-trust authorities and is due to complete later this month.
It marks the latest round of divestments from the food entrepreneur’s main 2 Sisters business as part of a focus on its core UK poultry operations, with the likes of Holland’s Pies, Goodfella’s, Fox’s Biscuits and Christmas pudding maker Matthew Walker all sold since a restructure kicked off in 2018.
2 Sisters said the deal for the business significantly strengthened its balance sheet ahead of a planned refinancing next year.
The “arm’s length” transaction, which followed an independent third-party valuation, means the poultry giant will have paid down debt levels to about £300m, according to estimates by City sources.
This represents a big reduction in the more than £1bn figure it owed in 2016 – marking 2 Sisters parent Boparan Holdings Limited’s lowest debt levels since Singh acquired Northern Foods in 2011.
With 2 Sisters’ bond funding arrangements expiring within the next 12 months, it said its latest major cash injection would give the business “attractive options for refinancing when the time comes to address corporate funding in the coming months”.
It would also allow the business to activate its ‘Next Generation’ investment programme, with a big focus on technology, automation and improving animal welfare.
At the same time, 2 Sisters said shifting Storteboom under the BPO umbrella would allow the business to rebuild in the wake of challenging market conditions on the continent, where an influx of Ukrainian poultry and “restrictive” agricultural policies adopted by the Dutch government have contributed to a slump in poultry prices.
Read more: 2 Sisters owner Boparan remains £23m in the red despite price hikes
Storteboom employs about 2,700 staff at six poultry processing centres in the Netherlands and three in Poland. It will join the likes of Bernard Matthews, Banham Poultry and Elkes Biscuits in the BPO, along with Singh’s portfolio of restaurant businesses.
“This is a significant and transformational deal and unlocks many opportunities for the future, so we are very pleased to announce an agreement has been reached,” Singh said.
“All my companies will benefit as it creates a stronger, more agile group of businesses and provides a platform for an unprecedented level of internal investment.”
As well as strengthening Boparan Holdings, the sale gave Storteboom “a dedicated regional focus on its European markets, unlocking undoubted growth opportunities through a focus on quality, animal welfare and sustainability”, Singh added.
“Our Next Generation plans are all about doing the right thing for people, planet and product and we look forward to unveiling our ambitious programme over the next few months. This deal will enable us to make this happen and we look forward to sharing more details soon.”
On the surface, the sale looked like an asset reorganisation, “but it kills many birds with one stone”, one industry insider with knowledge of the deal said.
“He’ll pare down debt at 2 Sisters that’ll make the business attractive for investors when refinancing comes, and he holds on to an underperforming asset which he sees long-term value in,” the source added.
“He’s got financial bandwidth in the BPO to make this deal happen, and it gives him headroom for some major investments like new factories and emerging automation technology. It’s a win-win.”
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