Hancocks Cash & Carry owner eyes private equity sale | News
The owner of speciality wholesaler Hancocks Cash & Carry is gearing up for a potential sale as investment banking partners prepare to send out documents to prospective investors.
Innovative Bites, which added Hancocks to its growing confectionery group in a 2017 acquisition, is working with US-based financial services firm Stephens to explore options, The Grocer can reveal.
An information memorandum (IM) is set to go out to potential buyers in the coming weeks before an expected auction process gets under way.
A deal for the group, which operates as World of Sweets after rebranding from IB Group in 2021, could fetch upwards of £160m, according to City sources. Private equity is considered the most likely buyer with a limited pool of potential trade buyers, one dealmaker said.
“There are a wide pool of potential buyers and lots of interest for the tech-enabled business,” the source added. “It has fantastic distribution, multiple routes to market, focused on brands, with exclusive brand arrangements, and has an affordable price point.”
Founded in Bedfordshire by Vishal Madhu in 2008, Innovative Bites has grown to become the UK’s number one confectionery distributor, importer and wholesaler following a series of deals.
The group acquired Bonds of London, one of the UK’s oldest confectionery businesses, in 2016 to double sales to about £50m before making the largest acquisition in its history with the £100m takeover of Hancocks.
Revenues at the group recovered to £186m in 2021 – a 22% year-on-year rise – following disruption and closures during the pandemic, with adjusted EBITDA up 64% to £12.4m, according to the latest Companies House accounts.
A City source said EBITDA was now closer to £20m and the group could achieve an 8x multiple in a sale.
“IB Group has performed exceptionally well developing a market-leading snacking business,” a spokeswoman said.
“The business and its brands continue to gain awareness and distribution, providing customers large and small with industry-leading product development and service levels.”
She added: “The owners of IB Group regularly receive inbound interest in the business. Management and shareholders remain fully committed to the business.
“Stephens are a long-term and trusted advisor to the business.”
Stephens declined to comment.
Sales at Hancocks, which celebrates its 60th anniversary this year, bounced back 39% to £91.7m in 2021 as operations recovered from Covid restrictions when its cash & carries were forced to close.
The business used the pandemic to supercharge online growth, launching a new website and buying a 140,000 sq ft distribution centre to support the shift to digital channels.
Hancocks now operates from 14 wholesale stores spanning the length of the UK, offering more than 3,000 products.
Hancocks was established by Ray and Liz Hancock at their Leicestershire sweet shop in 1962, with sons Andrew and Adrian taking over in 1986.
The demise of Woolworths in 2009 helped accelerate growth at the business, with sales reaching £100m before a buyout by H2 Equity Partners in a £50m MBO in 2012.