Kitwave accepts GBP250 million OEP bid as sales grow but profit stalls

(Alliance News) - Kitwave Group PLC on Thursday said it has accepted a GBP251 million takeover offer from New York investment company OEP Capital Advisers LP.

The cash bid values each share in the North Shields, England-based food wholesaler at 295 pence.

In response, shares in Kitwave soared 33% to 293.12 pence each in London on Thursday.

The deal, which would be implemented by way of a scheme of arrangement, is expected to become effective during the first quarter of the year.

"OEP has an excellent track record of helping businesses like Kitwave to significantly scale and the board believes that becoming a private company will provide greater financial flexibility to achieve its ambitions," Kitwave Chief Executive Ben Maxted said.

OEP said the bid has the support of investors speaking for 21.6% of Kitwave shares.

Founded in 2001 and spun out of JP Morgan Chase & Co in 2015, OEP is a middle market private equity firm focused on the industrial, healthcare, and technology sectors.

OEP said the acquisition of Kitwave represents a "compelling opportunity to support and accelerate the growth of one of the UK's leading delivered wholesale groups".

Kitwave said pretax profit decreased slightly to GBP22.4 million in the financial year that ended in October from GBP22.5 million the year prior, despite revenue rising 21% to GBP802.7 million from GBP663.7 million.

Adjusted operating profit rose 12% to GBP38.0 million from GBP34.0 million, but basic earnings per share fell by 14% to 20.1 pence from 23.5p.

Bottom-line results included exceptional restructuring expenses of GBP2.4 million compared to just GBP100,000 the year prior, relating to operational changes, including reducing the number of distribution centres from four to two.

Kitwave said the Retail & Wholesale division outperformed in both revenue and adjusted operating profit, while the integration of Total Foodservice and Miller Foodservice was completed, and progress is being made on the operational integration of the combined business into Creed Foodservice.

"Kitwave continues to pursue operational and commercial synergies from the integration of its Foodservice business to mitigate cost headwinds and provide a platform for future growth," it said.

By Jeremy Cutler, Alliance News reporter

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