Geert Struyven, corporate finance partner at Crowe, explains his role in the April 2019 sale of the Burden Group to Caneda Foods, as well as detailing the challenges and the strategy of the acquirer

What is the deal?

The April 2019 sale of the Burden Group to Caneda Foods, a buy-and-build investor in the UK food supply market. It has operations across the country and, trading as James Burden, it’s the largest business in Smithfield Market. It also owns Cavendish Ships Stores, the UK’s largest supplier of food and drink to ships.

What was your role?

After acquiring the company in a bank-backed MBO in 2009, the Burden management team significantly grew the business. Last year they wanted to hand over future strategic development to a new team, while keeping day-to-day responsibilities. They wanted a buyer who would be sensitive to the culture of their business and further develop it. I ran the sales process with our corporate finance manager, Lewis Clarke. We agreed the preferred buyers list and then made contact. Caneda became the preferred bidder – we negotiated the deal and project-managed the financial and legal diligence process to completion.

Who were the other advisers?

James Bullock and Tim Turner led the legal team from Brachers, for the vendors. There were many legal complexities to negotiate for the final SPA. Leumi provided an asset-based finance facility, with its regional sales director Rob Wakeford leading on that transaction.

What was your introduction?

Crowe advised on the 2009 MBO and has been a longstanding adviser to the company since then. Our relationship is ongoing, as Crowe has been retained as auditor post-transaction.

What was the sale strategy?

Maintaining confidentiality of the sales process was very important for the shareholders as they did not want the ‘for sale’ rumours circulating around Smithfield market, for one thing. That’s why we agreed an approved buyers list upfront, then made direct contact with potential purchasers, rather than using a more conventional ‘taster’ route. It showed how important a personal relationship network can be to help open doors.

What were the challenges?

There were several complexities. Dealing with the relocation and compensation payments from the Corporation of London in connection with the likely relocation from Smithfield to new premises in Barking was a major one. The diverse operations of the business made it hard work to find one suitable buyer. The business being independent was something the owner-managers considered a great strength for customers and employees, so they were adamant it would not be absorbed by any other national food distributors. Trust was gained during the process. The business is heavily reliant on imports from elsewhere in Europe, so Brexit was also a factor. The Cavendish warehouse was to relocate shortly after completion to larger, more modern facilities.

The strategy of the acquirer?

Caneda believes that the UK food supply chain is complex, fragmented and structurally inefficient. It seeks to build an alternative food supply model. This was an essential part in their jigsaw. The existing management team is still in place and fully motivated to grow the business through an incentivisation scheme. There’s been no restructuring of the business post sale.

The CV

Geert Struyven is a Kent-based corporate finance partner at Crowe. He joined Arthur Andersen in 1995 and trained as an ACA before moving into transaction services. In 2001 he joined BDO as corporate finance director, and in 2007 joined Crowe to lead the corporate finance team in Kent. As well as leading transactions, he specialises in valuations.

Recent deals:

• Acquisition of Cactus Worldwide by British Study Centres in September 2019;
• Sale of Broden Media to Nineteen Group in August 2019;Sale of British Assessment Bureau to August Equity in January 2019.

This article originates from the Corporate Financier March 2020 edition. The magazine is exclusively available to ICAEW Corporate Finance Faculty members.

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