Corporate takeover activity is often fuelled by synergies between former executives and finance vehicles. Glynn Davis looks at the names that are set to pounce
Febrile speculation over the future of the legacy retailers Marks and Spencer and Sainsbury has thrown the media spotlight on the likes of Allan Leighton, Philip Green and Archie Norman. But it is the bankers and private equity people behind the scenes pulling the purse strings who have lent weight to the rumours. So who are these people and, more importantly, who are they backing?
Green would not have been able to take a strike at Marks & Spencer had it not been for the backing of his ally Peter Cummings at Bank of Scotland (BoS) - who previously funded Green’s Bhs and Arcadia deals - and other bankers. And should Green have another go at M&S or take a shot at Sainsbury, then rest assured that Cummings would be involved.
As a board member of Bhs, Leighton undoubtedly knows Cummings, which would make it easier to open doors to the BoS coffers. But he is also on the board of Whittington Investments that would enable him to alternatively call on the extensive Weston family financial resources.
Investment banker George Magan - former treasurer of the Conservative Party (which possibly links him to Tory MP Archie Norman) - also ran the slide rule over Sainsbury, but such a deal would need to garner the support of a major private equity backer to get off the ground. In this camp falls US-based Hicks, Muse, Tate & Furst, which owns Weetabix and earlier this year floated Premier Foods; and Kohlberg Kravis Roberts, which threw its hat into the ring during the Morrisons bidding war and used Norman as an advisor.
This use of former senior executives by private equity houses as advisors on potential deals is common practice. A conduit for bringing the two camps together is Leeds-based Directorbank, which focuses on providing
directors and non-executive directors for private equity-backed management buy-outs.
It has around 2,000 senior directors on its books and 50-plus private equity firms. This month it held a dinner for branded consumer goods executives to meet up with private equity players - highlighting the level of corporate activity in the food sector at the moment.
Peter Macielinski, who built up Geest, is one such former executive. He has linked up with Duke Street Capital and will no doubt be lending his experience to the company as it stalks Uniq.
It is not alone as American International Group and CapVest Equity Partners (owner of Young’s Bluecrest) have also expressed an interest in buying Uniq. The attraction is its strong cashflows and its undervalued share price - as a result of its exposure to the supermarkets.
It is for the same reasons that Iceland-based convenience chain Bakkover has built up a 20% stake in Geest.
And it is not the only Icelandic money looking for deals in the UK as Big Food Group confirmed it would recommend an offer by Baugur of 95p per share to its shareholders, subject to conditions.
Baugur chief executive Jon Asgeir Johannesson is rumoured to have been in talks with Iceland founder Malcolm Walker about selling on some stores if Baugur is successful in its bid. Walker himself has also been deal-making of late and secured financial backing for his Cooltrader food chain from Gresham.
There have been many other deals at the lower end of the food chain as the likes of Inter Link Foods, Finsbury Foods, The Real Good Food Company and Glisten have continued with their acquisition-hungry strategies that involve buying up under-utilised food manufacturers.
Pieter Totte, chairman of Real Good Food and founder of Finsbury Foods, has been involved with most of these companies at one time or another and so could be classified as a mover and shaker.
Regardless of their smaller size, these companies do attract executives with illustrious histories. Guy McCracken joined the board of Glisten as a non-executive director to add to his role as chairman of Duchy Originals, but it will be his former role as a joint managing director at M&S where he was in charge of the food division that he will be best remembered.
What strings he can pull now is unknown but in the world of buy-outs and deal making it is all about the level of your contacts and being able to make things happen. And for the sector’s real movers and shakers it looks like there will be no shortage of things happening in the near future to keep them occupied.
The hunters on the prowl
> >six of the men who could change the shape of food retailing next year
Allan Leighton
Worked alongside Archie Norman turning around the fortunes of Asda before it was sold to Wal-Mart in 1999. Since then he has held numerous non-exec directorships, resignation form three of which set tongues wagging that he was lining up a bid for Sainsbury. One board seat he retains is with the Weston family holding company Wittington Investments, which owns a variety of food-related businesses including the Loblaw supermarket chain in Canada.
Archie Norman
Norman is currently the Conservative MP for Tunbridge Wells but looks set to return to the business world as he is standing down at the next general election. He made his name transforming Asda in the 1990s after he became chief executive following a stint as finance director at Kingfisher. He is being linked to the various private equity houses that are rumoured to be looking at Sainsbury.
Peter Cummings
Normally keeps behind the scenes but this influential banker (managing director of corporate banking, Bank of Scotland) made an appearance at the recent Bhs results where he applauded one of the greatest beneficiaries of his loans: Philip Green. Has backed the entrepreneur's acquisitions of Bhs and Arcadia as well as the Barclay Brothers' purchase of Littlewoods. Never far away when a deal is announced.
Philip Green
Failed to get his hands on Marks & Spencer early this year but a six month block on bidding again expires early next year so don't discount a third tilt at the business. Green had also been linked with Sainsbury but that might be a bite too far. Shouldn't have much problem finding financing - having a two billion pound war chest and some admirers at both Goldman Sachs and Bank of Scotland to help.
Jon Asgeir Johannesson
As the top man at Baugur Group, he has built a reputation for canny investments in undervalued UK retailers and has close links to a number of banks in both Iceland - such as Kaupthing - and in the UK - including Bank of Scotland - that help fund his ventures. BoS is backing his current bid for Big Food Group. Baugur also has a 22% stake in Somerfield and owns Julian Graves.
Johannes Huth
From next year Huth heads up the London outpost of renowned private equity firm KKR. HE does not have a record as an investor in the food sector, but KKR is one of the few organisations that can call on sufficient funds to back the largest of buy-out deals. It has invested $4.5bn of equity in Europe in 10 deals.
Febrile speculation over the future of the legacy retailers Marks and Spencer and Sainsbury has thrown the media spotlight on the likes of Allan Leighton, Philip Green and Archie Norman. But it is the bankers and private equity people behind the scenes pulling the purse strings who have lent weight to the rumours. So who are these people and, more importantly, who are they backing?
Green would not have been able to take a strike at Marks & Spencer had it not been for the backing of his ally Peter Cummings at Bank of Scotland (BoS) - who previously funded Green’s Bhs and Arcadia deals - and other bankers. And should Green have another go at M&S or take a shot at Sainsbury, then rest assured that Cummings would be involved.
As a board member of Bhs, Leighton undoubtedly knows Cummings, which would make it easier to open doors to the BoS coffers. But he is also on the board of Whittington Investments that would enable him to alternatively call on the extensive Weston family financial resources.
Investment banker George Magan - former treasurer of the Conservative Party (which possibly links him to Tory MP Archie Norman) - also ran the slide rule over Sainsbury, but such a deal would need to garner the support of a major private equity backer to get off the ground. In this camp falls US-based Hicks, Muse, Tate & Furst, which owns Weetabix and earlier this year floated Premier Foods; and Kohlberg Kravis Roberts, which threw its hat into the ring during the Morrisons bidding war and used Norman as an advisor.
This use of former senior executives by private equity houses as advisors on potential deals is common practice. A conduit for bringing the two camps together is Leeds-based Directorbank, which focuses on providing
directors and non-executive directors for private equity-backed management buy-outs.
It has around 2,000 senior directors on its books and 50-plus private equity firms. This month it held a dinner for branded consumer goods executives to meet up with private equity players - highlighting the level of corporate activity in the food sector at the moment.
Peter Macielinski, who built up Geest, is one such former executive. He has linked up with Duke Street Capital and will no doubt be lending his experience to the company as it stalks Uniq.
It is not alone as American International Group and CapVest Equity Partners (owner of Young’s Bluecrest) have also expressed an interest in buying Uniq. The attraction is its strong cashflows and its undervalued share price - as a result of its exposure to the supermarkets.
It is for the same reasons that Iceland-based convenience chain Bakkover has built up a 20% stake in Geest.
And it is not the only Icelandic money looking for deals in the UK as Big Food Group confirmed it would recommend an offer by Baugur of 95p per share to its shareholders, subject to conditions.
Baugur chief executive Jon Asgeir Johannesson is rumoured to have been in talks with Iceland founder Malcolm Walker about selling on some stores if Baugur is successful in its bid. Walker himself has also been deal-making of late and secured financial backing for his Cooltrader food chain from Gresham.
There have been many other deals at the lower end of the food chain as the likes of Inter Link Foods, Finsbury Foods, The Real Good Food Company and Glisten have continued with their acquisition-hungry strategies that involve buying up under-utilised food manufacturers.
Pieter Totte, chairman of Real Good Food and founder of Finsbury Foods, has been involved with most of these companies at one time or another and so could be classified as a mover and shaker.
Regardless of their smaller size, these companies do attract executives with illustrious histories. Guy McCracken joined the board of Glisten as a non-executive director to add to his role as chairman of Duchy Originals, but it will be his former role as a joint managing director at M&S where he was in charge of the food division that he will be best remembered.
What strings he can pull now is unknown but in the world of buy-outs and deal making it is all about the level of your contacts and being able to make things happen. And for the sector’s real movers and shakers it looks like there will be no shortage of things happening in the near future to keep them occupied.
The hunters on the prowl
> >six of the men who could change the shape of food retailing next year
Allan Leighton
Worked alongside Archie Norman turning around the fortunes of Asda before it was sold to Wal-Mart in 1999. Since then he has held numerous non-exec directorships, resignation form three of which set tongues wagging that he was lining up a bid for Sainsbury. One board seat he retains is with the Weston family holding company Wittington Investments, which owns a variety of food-related businesses including the Loblaw supermarket chain in Canada.
Archie Norman
Norman is currently the Conservative MP for Tunbridge Wells but looks set to return to the business world as he is standing down at the next general election. He made his name transforming Asda in the 1990s after he became chief executive following a stint as finance director at Kingfisher. He is being linked to the various private equity houses that are rumoured to be looking at Sainsbury.
Peter Cummings
Normally keeps behind the scenes but this influential banker (managing director of corporate banking, Bank of Scotland) made an appearance at the recent Bhs results where he applauded one of the greatest beneficiaries of his loans: Philip Green. Has backed the entrepreneur's acquisitions of Bhs and Arcadia as well as the Barclay Brothers' purchase of Littlewoods. Never far away when a deal is announced.
Philip Green
Failed to get his hands on Marks & Spencer early this year but a six month block on bidding again expires early next year so don't discount a third tilt at the business. Green had also been linked with Sainsbury but that might be a bite too far. Shouldn't have much problem finding financing - having a two billion pound war chest and some admirers at both Goldman Sachs and Bank of Scotland to help.
Jon Asgeir Johannesson
As the top man at Baugur Group, he has built a reputation for canny investments in undervalued UK retailers and has close links to a number of banks in both Iceland - such as Kaupthing - and in the UK - including Bank of Scotland - that help fund his ventures. BoS is backing his current bid for Big Food Group. Baugur also has a 22% stake in Somerfield and owns Julian Graves.
Johannes Huth
From next year Huth heads up the London outpost of renowned private equity firm KKR. HE does not have a record as an investor in the food sector, but KKR is one of the few organisations that can call on sufficient funds to back the largest of buy-out deals. It has invested $4.5bn of equity in Europe in 10 deals.
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