IAWS looks to bid for four Spillers flour mills on the market in Britain
IAWS will be interested in bidding for all four of the Spillers flour mills in Britain that the British group Tomkins has been ordered to sell by the Office of Fair Trading (OFT), IAWS chief executive Mr Philip Lynch has stated.
Tomkins bought six Spillers mills from Kerry for £104 million in the immediate aftermath of Kerry's £394 million acquisition of Dalgety Food Ingredients, of which Spillers was a component.
But the deal between Tomkins and Kerry was not made conditional on OFT approval and last month it emerged that Tomkins had fallen foul of the OFT which ordered it to sell the four Spillers mills at Avonmouth, Liverpool, Newcastle and Tilbury in London.
"We would be interested in all four mills; it's a good business and we know it well and it would fit in well with our Cuisine de France expansion in the UK," he stated. He added that IAWS expected to receive an offer for sale document from Tomkins in the next four to five weeks. Funding for a bid for the four mills - which is likely to be at least £60 million - would come from borrowings, he added.
Mr Lynch said that the same monopoly consideration that blocked the Tomkins acquisition of Spillers would probably militate against a bid by the other major British flour miller, Associated British Foods. As a result, it would seem that the two front-runners for the Spillers mills are IAWS and Greencore, although it is not clear whether Greencore would be interested in bidding for all four mills.
IAWS plans to invest £15 million in a new Cuisine de France plant in Britain, with Nottingham and Liverpool seen as possible locations.
The investment in a new Cuisine de France plant is the main plank of the expansion of the baked goods business in Britain in the next few years. But IAWS has also expanded Cuisine de France into the Benelux countries through a franchise agreement with Belgian group Vande-Moor tele and another franchise arrangement in Scandinavia.
The group has also set up a Cuisine de France operation in Chicago and the first shipment will be airlifted to the US in the next two weeks. If the Chicago operation is a success, the concept will be expanded to other US cities.
When asked if IAWS would be interested in bidding for Irish Fertiliser Industries (IFI), Mr Lynch said the group had yet to receive any communications from IBI Corporate Finance, which was appointed in early August to advise the Government and ICI on the sale of IFI.
"We'd have to have an interest, but I wouldn't be surprised if the sale is withdrawn. I don't think it'll be an issue for us in 1999," he said. He added that the Government had chosen the wrong time to sell IFI - at the bottom of the cycle.
Yesterday, IAWS also announced the acquisition of Alba Proteins in Britain for £3.4 million sterling. The company, which processes products for the pet food industry in Britain, had operating profits of £282,000 sterling in the year to March 1998.
On IAWS's recent property sales in the Dublin dockland area, Mr Lynch professed to being pleasantly surprised at the £8.8 million it obtained for the 1.5-acre Dock Milling site in Dublin. He added that the group valued its adjacent Bolands flour mill site at £22 million and this was likely to be sold in the not too distant future as IAWS relocated its flour milling operations to a new £15 million plant north of the river.
IAWS also has a 22-acre waterfront site in Waterford and is in discussions with Waterford Harbour Board on a joint development on land owned by both groups. It has a five-acre site in the Cork docks. "We won't need any upriver facilities in Cork or Waterford after three years," he stated, indicating that these valuable sites would also be sold.