New PE Exit Strategies Are Reshaping Industry, Schroders Says
It's not uncommon for mid and large buyout firms to purchase assets from smaller funds, but now even those at the bottom end of the market are turning to continuation vehicles so frequently that it may disrupt this type of chain buying within the PE industry, according to Schroders Capital, a division of the London-based asset manager.
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'This is a merger out of distress, not progression' – can ABF-Hovis deal bolster UK bread businesses?
Leaf through at least the last ten years of Associated British Foods' annual reports and it's clear the UK bread market has been no cakewalk for the food, ingredients and retail group. There have been years in which ABF has reported year-on-year revenue growth from its Allied Bakeries arm in the UK but the last decade has been mostly one of sluggish sales and of striving to turn a profit. ABF's struggles in UK bread have long begged questions about its future in the category. Back in 2019, then finance director John Bason, after reporting the third consecutive year in which Allied Bakeries had made an operating loss, told Just Food the company remained committed to the market and ruled out a sale. And the debate stretches back at least as far as this correspondent has covered the food sector. In ABF's 2008 financial year, the Kingsmill bread brand owner said Allied Bakeries had performed 'poorly' in the face of rising commodity costs and fierce competition in the UK bread market (it was ever thus). Some City analysts had begun asking whether ABF should remain in bread, a business central to the start of the company in the 1930s. Fast-forward five years to 2013 and there was speculation ABF might swoop for Hovis, then owned by UK manufacturer Premier Foods. Robert Lawson, the managing partner at European consultancy Food Strategy Associates, remembers the opposite transaction was mooted when he was at Premier in the late 2000s. 'The synergies were significant – consolidation of factories and of the two businesses' expensive direct-store-distribution systems delivering on a daily basis, rationalisation of the management teams running the businesses, consolidation of mills and procurement synergies. On top, there was also the opportunity to rejuvenate Hovis's aged bakery network, which even then was much older than ABF's,' Lawson says. This week, a deal did come to pass – and was something of a surprise to some industry watchers. When ABF announced in April it was putting Allied Bakeries up for strategic review – and, days later, said it was in talks with Hovis's owners, the private-equity firm Endless – many onlookers assumed the group was set to leave the UK bread market. 'Getting bigger in bread is probably not what investors want to see,' Barclays analysts covering ABF said in a note to clients on Friday (15 August). 'No doubt investors would have preferred ABF to have exited UK bread altogether but this wasn't really a realistic option given the structure of the industry with market leader Warburtons family-controlled and Hovis owned by private equity.' City analysts estimate ABF has lost hundreds of millions of pounds in the over-supplied and stagnant UK bread market in recent years. Demand for sliced bread has been soft for a number of years, while Kingsmill and Hovis, with their product ranges largely centred on conventional fare, have faced a trio of competitive threats: private label, more artisan products like sourdough and the strength of the privately owned Warburtons, which has built the largest branded business on solid marketing and innovation. 'We reckon that Allied has lost anywhere between £500m ($673.4m) and £750m over the last 15 years in UK bread,' Shore Capital analyst Clive Black tells Just Food. 'If it hadn't been for the envelope of ABF, [Allied Bakeries] would have been probably closed some time ago. Those numbers are the accumulated trading losses, the redundancies, restructuring and impairments that have taken place. At the moment, we would suggest it's losing on an annualised basis somewhere between £25m and £40m a year.' UK competition scrutiny ABF believes the combined Allied Bakeries and Hovis business can be a more robust operator. 'This transaction will create a UK bakeries business that is both profitable and sustainable over the long term. Supporting the Hovis and Kingsmill brands with well-invested and efficient operations will also enable innovation and growth,' George Weston, ABF's CEO, said on Friday. 'This solution will create value for shareholders, provide greater choice for consumers and increase efficiencies for customers.' The completion of the transaction is subject to the approval of the UK's Competition and Markets Authority, which will likely look closely at a deal bringing together two of the largest branded players in the country's bread market. Shore Capital's Black believes the CMA should let the transaction through, pointing to the choice presented by private label, by regional manufacturers like Roberts Bakery and Jackson's Bakery and, of course, by Warburtons. 'This is a merger out of distress, not out of progression,' he says. 'If it doesn't take place, I think there will be very substantial, potentially irrational, rationalisation. If it does take place, then a necessary evil will probably occur. I don't think it is detrimental to the UK shopper's interest.' When Lawson was at Premier, the mooted cost benefits of an Allied Bakeries-Hovis combination made the idea of a deal 'compelling'. He adds: 'The view then was that [competition approval] was unlikely. Today, Kingsmill is a much-diminished presence on shelf so retailers no longer have the same ability to punish the consolidation with brand rationalisation – and there is limited alternative to retailers of branded suppliers, so the synergies may hold.' ABF does not disclose detailed sales and profit numbers for Allied Bakeries. In the group's 2024 fiscal year (the 12 months to 14 September), Allied Bakeries saw a 'much-reduced operating loss' amid what ABF called 'improved sales and operational performance'. However, when the Sunblest brand owner announced its results for the first half of the company's current financial year in April, it appeared Allied Bakeries was again finding the going tough. 'Our UK-focused businesses declined overall,' the Ryvita crispbread and Jordans granola maker said. 'As expected, this was primarily due to lower volumes and sales in Allied Bakeries, which resulted in an increased operating loss. Allied Bakeries continues to face a very challenging market.' Endless snapped up Hovis from Premier and US investor Gores Group in late 2020. Companies House, the UK business register, has two full years of financial results since the change of ownership. The most recent set of numbers cover the 52 weeks to 28 September 2024, when revenue stood at £446.8m, down almost 9% on a year earlier, an operating loss of £2.9m (compared to one of £3.2m the previous year) and a net loss of £4.7m (against one of £3.6m). 'The group has achieved positive financial progress despite continued tough trading conditions,' commentary alongside the figures reads, highlighting improved EBITDA. 'These results highlight our focus on managing the cost base in a highly competitive market and demonstrating good progress during the year, which will continue into 2025.' Cost synergies to be captured Should the CMA clear the deal, how might ABF go about creating that long-term 'profitable and sustainable' UK bakery business its CEO touted last week? Barclays' analysts believe the synergies ABF might extract from the deal 'could be very significant'. They argue the £50m in cost savings suggested by unnamed industry sources to Sky News 'could be conservative', adding: 'The acquisition will combine the production and distribution activities of the two businesses, driving significant cost synergies and efficiencies with the aim of creating a sustainable and profitable UK bread business in the long term. It could free up money to invest in the more interesting parts of market – high-protein breads, breakfast goods. If ABF could turn a £30m loss into a £20-30m profit on a two- to three-year view and pay around £75m for the business, that would be an attractive payback.' At Shore Capital, Black is sceptical about the prospect of substantial revenue synergies but says ABF could look across the business, from the C-suite, through manufacturing and distribution and onto product ranges, in order to find efficiencies. 'Once they've worked out the assortment, starting to put the production plan together, which ultimately may lead to the closure of bakeries or the rationalisation of lines,' he suggests. 'Then, perhaps under the radar, but most significantly, combining the distribution model. Like milk, bread is one of the few products that is still delivered to store and combining distribution with materially improved vehicle utilisation means saved costs. From the centre right through to the distribution process, removing duplication, going to a single business model and taking a lot of costs. Whether this deal actually does make for more innovation in product and for the development of brands in revenue-based synergies remains to be seen. I've been around too long to trust revenue-based synergies.' Now it's over to the CMA where competition officials will sift through the financials of both businesses. Warburtons will be watching closely. 'It is hard to argue that manufacturers have the whip hand over retailers given the scale of industry losses,' Barclays adds. "'This is a merger out of distress, not progression' – can ABF-Hovis deal bolster UK bread businesses?" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
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Joly: Visits to Saab, Lockheed 'normal' part of her job amid F-35 review
OTTAWA — Industry Minister Mélanie Joly says Canadians shouldn't read too much into her visit to a Swedish defence manufacturer that comes right in the middle of a major government review of the F-35 fighter jet procurement. Joly says she visited Saab's facilities in Sweden this week and was shown the Gripen-E jet, which is one of the possible contenders to replace the controversial U.S.-made F-35 fighter jet. Prime Minister Mark Carney ordered the review shortly after he became prime minister in March, as Canada sought tighter security and defence ties with Europe in response to U.S. President Donald Trump's trade war. The review is to be completed by the end of the summer and Joly says her role in it is to ensure the Canadian government understands all its options and what the industrial benefits to Canada would be in its final decision. Joly says this is a "normal" part of her job, and that she will also be meeting with Lockheed Martin, which makes the F-35, in the coming weeks. Joly is wrapping up a trip to Sweden and Finland with Secretary of State for Defence Stephen Fuhr, which was focused on strengthening defence-industrial ties in Europe. This report by The Canadian Press was first published Aug. 20, 2025. Kyle Duggan, The Canadian Press Sign in to access your portfolio
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Wall Street bosses want junior bankers to come clean about PE jobs. It won't be easy.
Big banks are cracking down on entry-level workers with covert private equity jobs. Citing conflicts of interest, they are asking junior bankers to disclose future-dated job. Experts warn that this approach could encourage secrecy and undermine retention. Big banks are cracking down on junior bankers with covert private equity jobs — but experts warn that their approach may drive secrecy further underground. To guard against private equity firms poaching junior talent, investment banks are requiring analysts to disclose in writing if they've accepted future-dated jobs. While each bank's policy is different, juniors who confess to having a PE job may be terminated, moved to another team or division, or taken off certain deals — consequences that could encourage ambitious young bankers to clam up and undermine banks' efforts to retain them. "These are smart people. Their cognitive calculus is always working," said Maurice "Mo" Cayer, an organizational psychologist and lecturer at the University of New Haven. Young bankers facing termination for accepting PE jobs might think, "If I get caught, I'll lose my job. Well, I'll lose my job anyway," Cayer added. The banks declined to comment. Redeployment could also backfire if the moves are viewed as demotions. "As long as they're still doing the job they were hired for and they're not relocating them to a different geography or a different vertical, that's okay," said Kate Morgan, founder and CEO of Boston Human Capital Partners, a talent acquisition and HR consulting firm. Anything short of that could result in bankers playing it safe, she said. Even bankers who stay on the M&A track may have reason to worry, said Anthony Keizner, cofounder of Wall Street recruiting firm Odyssey Search Partners. "The bigger thing that the bankers are worried about is if you tell them you're leaving, then you're less likely to be considered for the most high-profile deals, and it could affect the way you're rated, and it could affect your bonus," he said. Meanwhile, the attestations don't seem to be deterring young bankers from their buyside ambitions, according to Keizner, whose recruiting firm has surveyed about 1,100 first-year bankers in the past few weeks. In describing the early findings, he said many of them are concerned about the situation and "unsure how to proceed" — but only "a tiny proportion" said they're planning to not participate in PE recruiting because of policy changes at their banks. Questioning conflicts Banks have said the attestations are necessary to protect against conflicts of interest that can arise as a result of private equity recruiting tactics, which seek to hire junior bankers for jobs that won't start for two years, after they have been trained by the banks. That means a junior banker could be assigned to work on a deal involving a future employer. The people who spoke to Business Insider, however, questioned the ambiguity of this argument. "What does it mean to avoid conflicts?" Keizner said, adding, "Say you accept a role at PE firm X. Does it mean you can't work on something related to PE firm Y? Or can you not work on a deal for a company where PE firm X has a portfolio company that's competitive to it?" "Just because you've accepted a role at the PE firm in 18 months' time, it's not like you're privy to their deal pipeline or you've got the team on speed dial," he added. Morgan also warned that prioritizing hard-to-control compliance issues could hurt retention. "They're going to always feel like the banks are now gatekeeping their ambition," she said of junior bankers. "They are sort of saying, 'we don't trust you,'" she added of the banks. A New York-based private equity employee who was previously an investment banker agreed that banks are sending the message that "analysts owe the firm their underlying loyalty." "To me personally, it wouldn't mean anything," she said, adding, "People will continue to recruit regardless." For now, banks don't have much to worry about because private equity recruiting has largely stalled. "I don't think any of the participants nor firms know exactly where this is all headed," Keizner said, adding. "Everyone is watching and waiting to see how the pieces will come together." When and if it resumes, the attestations could prevent some young bankers from participating, said Cayer. "There are a lot of good Boy Scouts," he said, adding, "They've studied hard. They're conscientious people." "If the bankers won't show up because they're too scared or being seriously restricted from doing so — well that would be a big problem. That really would put a stick in the spokes of the system. But my sense is that we are not at that stage," Keizner said. "I think the bankers will still want to interview. The PE firms still want to hire," he added. "Yes, it's going a little later, but certainly based on what we've seen so far, it's going to continue happening." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
