Administrators at S&A Foods are hopeful of striking a deal to sell the ready meals supplier’s Derby factory after interest from a “number of parties”, but any deal would come too late for the 267 staff already made redundant.
The business, which has supplied Asda with curries since 1987, was forced to appoint Deloitte this week after running into “cashflow difficulties” following the traditionally quieter summer trading period.
At its peak, the 164,000 sq ft factory made 180,000 ready meals a day and helped S&A generate revenues of more than £60m. Sales had fallen back to £44m by the year to 31 March 2014, with profits after tax of just £58k.
The factory is expected to particularly appeal to ready meals manufacturers and food processors, though one City source questioned whether the likely candidates such as Bakkavor, Kerry Foods and Oscar Mayer would need extra capacity outside of their own sites.
S&A has struggled in recent years as Asda, which accounted for up to 90% of the business, scaled back its range. Founder Perween Warsi appointed PWC in early 2014 to find a buyer for the business, but failed to secure a deal.
Another dealmaker source said it was always a risk to potential purchasers if there was a big focus on one customer. “As supermarkets rationalise their suppliers, there is even more risk being so reliant on one client,” they added. “Businesses that have done well over the past few years have got a number of different routes to market and a number of different channels.”
Asda had recently informed S&A that, following a tendering exercise, it would not renew its contract, leading Warsi to insist the blame for the collapse lay with the supermarket. “The harsh reality is that we simply could not run a financially viable business on the revised terms offered by Asda,” she said.
However, an Asda spokesperson said it had committed to supporting the business for another 12 months to give it time to find new customers. Asda is now facing a shortage of curries in shop and confirmed it was in negotiations with alternative suppliers, thought to include the likes of Kerry, Bakkavor and Greencore.
Source
Edward Devlin
No comments yet