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Wed 4th Jan 2017 - Samworth buys West Cornwall Pasty Company
Samworth buys West Cornwall Pasty Company: Samworth Brothers has bought West Cornwall Pasty Company for an undisclosed fee three years after the Cornish pasty-maker was bought out of administration by a fund backed by former England footballer Danny Mills. The deal delivered a return of more than five-and-a-half times for private equity fund Enact, which bought Cornwall Pasty Company out of administration in April 2014 – Ebitda stood at £1.02m in its most recent full year. The acquisition includes West Cornwall Pasty Company’s 33 fully-owned outlets in rail stations and high streets across the country, as well as 19 franchised shops in Moto motorway service stations. A spokesman for Samworth Brothers said the purchase would complement the food producer’s existing portfolio, which includes the pasty brand Ginsters, making the group one of the biggest pasty vendors in the UK. West Cornwall Pasty Company, which makes all of its pasties in Cornwall and generated £13m of sales in the year to 31 March 2016 (2015: £12.5m), ran into trouble three years ago, blaming its problems on the introduction of the so-called ‘pasty tax’, which imposed VAT on pasties, as well as on weak trading at a number of its retail outlets. In 2014, it was bought out of administration by Enact, a fund controlled by private equity house Endless and backed by former England footballer Danny Mills. The firm set about changing the group’s strategy by expanding its coffee range and adding products to the retail offer. The Truro-based firm narrowed losses in its last financial year to £195,000 from a loss of more than £800,000 in the year before. Chris Cormack, investment director at Enact, said the two companies had been in formal discussions over a potential deal since September and that Enact had also been approached by a handful of other interested parties, including companies and private equity investors. “This deal was a natural fit for both businesses,” he said. “We decided this was the right time in the business’s growth story to sell. The management team have really transformed it and I’m proud of what we did. It is now time to pass it on to the next steward as a fantastic platform to build and grow on.” The West Cornwall Pasty Company was the first business that Enact purchased after it was founded in January 2014 to make investments of up to £5m in small and medium-sized companies in need of a turnaround. Asked how the pasty maker had changed since Enact bought it, Cormack said that it now offered a wider range of products, such as chocolate brownies and millionaires shortbread. “There wasn’t anything to support the pasty before,” he said. “I can’t eat anything hot without eating chocolate afterwards.” Samworth owns a number of businesses supplying desserts, sandwiches and ready meals to supermarkets and food outlets. Melton Foods, its sandwich-making operation, produces more than 1.5 million sandwiches a week. Alex Knight, chief executive, said the deal was a good extension of the company’s hot food-to-go division, which it is looking to develop. “We see the hot food-to-go sector as one area of real opportunity,” he said. Danny Mills, a former England and Leeds United defender, is one of 20 investors in the Enact fund and sits on the advisory board. He said: “There has been a lot of hard work behind the scenes. When we bought the pasty business we knew the troubles it had and that some poor decisions had been made, but realised it was a good brand. I’m pleased with the new buyer. Samworth are paying us a handsome fee and it gives them a chance to take it to the next level.” Like-for-like sales were up 7.6% in its most recent year, driven by customer growth of more than 3%. The company signed a supply agreement to BP for its estate of 320 Wild Bean Cafes and its franchise business saw 70% income growth. It had £1.4m of cash on the balance sheet and no institutional debt. 


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