RHM formulates effective plans for a £1bn flotation |
|
|
Published
:
Sat, 18 Jun 2005 05:40
|
The Largest flour miller of Britain, Ranks Hovis McDougall, commonly known as RHM contemplates to float on the stock market.
With valuation exceeding £1bn, RHM is owned by private equity firm Doughty Hanson which will continue to hold around 33pc after the flotation.
Besides making the leading Hovis bread, Mr Kipling cakes, Frank Cooper's marmalade and Mother's Pride bread, the food manufacturer also makes Sharwood's sauces and Paxo stuffing and Bisto gravy. Established as a flour miller in 1875, it listed in the London Stock Exchange in the year 1993 and was subsequently sold to Tomkins in 1992. Doughty Hanson later took it for £1.1billion, which included debt clearance worth £800m in 2000.
The group accoladed of annual savings of £20m in three years. This has been largely achieved by shutting/selling 11 factories and bringing about considerable reduction in the workforce to 16,300, which is almost 20%. Another factor, which has been instrumental in generating the savings, has been by consolidating the group’s procurement operations.
Chief Executive, Ian McMahon said, “ There are a lot of opportunities in efficiencies and cost-cutting," "We would expect these to drive strong profit growth in the next year or two, then to progress by investing those savings in our leading brands."
| He further added stating that total sales for the year till April was £1.5bn. The contracts with leading retailers like Pizza Hut and Marks & Spencer continue to stand (which contribute 50% of the sales) though the focus areas are also branded products.
The company intents to pay £125m of the sale proceeds into its pension deficit funds, which reveal a figure of £303m. This has already been reduced from £520m last year after the scheme changes made by the company, which entailed freezing pension able pay for four years and escalating employee contributions.
An industry expert opined that the pension contribution was mandatory "as it would have been an issue with prospective shareholders".
RHM comprises of an exhaustive network of 11 distribution warehouses and 51 factories with Hovis and Mothers Pride brands holding 26% of the bread market segment. Sales could be expected to grow at a low single-digit rate, the company said.
The company being headed by Ian McMahon is believed to be selling shares at an approximate value of £1.25m, which equates to around 25pc of his holding, sources said.
Andrew Allner, finance director will also sell 25pc of his holding, totaling to £500,000. However, RHM has frozen that the group’s top 50 managers will not sell more than 25pc of their holding in the flotation.
A source close to the transaction said: "Nobody wants to look at a company that's floating where all the top managers are seen to be bailing out." After flotation, the total stake held by management will reduce from 5pc to 3.5pc.
Jan du Plessis, chairman of British American Tobacco has been appointed as a chairman of the company. He said: "I have every confidence that, with its new business model and a strong portfolio of category-leading brands, RHM is well placed to become the leading UK-focused food company."
|
|
|
|
|
|
Print this Story
