UK: Vion plans to quit the UK ‘almost an inevitability

Dutch food giant Vion’s plans to sell its UK food businesses − throwing into doubt the future of its 13,000 UK employees − was “almost an inevitability,” according to leading City analysts.

Vion was bound to quit UK food manufacturing 'sooner or later', said Julian Wild
Julian Wild, food group director at legal firm Rollits, told: “The Vion businesses in the UK are, essentially, the old Grampian Country Food Group, which was bust when they bought it. So, the businesses was not in brilliant shape when Vion acquired it.”

In addition to questioning why Vion bought the business in the first place, Wild said the acquisition should have been followed by investing in the business and the development of a clear strategy. “Frankly, Vion has done neither of those things,” he said.

“I don’t think Vion has had a clear plan about how it was going to get those businesses into good shape and don’t think they particularly invested behind them either. So, I think it [the closure] was almost an inevitability, given the way the business has performed in Vion’s ownership. Sooner or later, they were going to have to seek an exit.”

Grampian

Shore Capital analysts Clive Black and Darren Shirley also questioned Vion’s acquisition of Grampian. “Vion entered the UK through the purchase of Kay Country Foods and augmented that through the acquisition of Tranfield,” they said in a statement.

“However, it was the group's acquisition of Grampian in 2008 that changed its commitment level to the UK market; raising an eyebrow or two across the trade as Grampian had proved to be a somewhat troubled business over the years.”

Since the acquisition, “Vion has consistently appeared to be 'on the back foot', and the announcement [of its decision to sell its UK business] is not a shock although its totality is somewhat surprising.”

'Strong level of interest'

Meanwhile, Vion chairman, Peter Barr, has spoken of a strong level of interest from the trade in the business, with detailed discussions taking place with a number of parties including management.``

Black and Shirley predicted that with Vion’ business mix – ranging from beef and lamb slaughtering to poultry processing and meat pie production – there were likely to be many interested parties.

Wild said: “I suppose in most cases management would have an interest if they think they can raise the necessary money but in this climate it is never easy. As with any process like this, it is always trade buyers against financial buyers. You’d generally put your money on trade buyers.”

Meanwhile, the Scottish finance minister told BBC Radio Scotland yesterday (November 20) that the prospects of successfully finding buyers for Vion’s UK food businesses were good.

John Swinney said: “It is so important for the Scottish food sector, the Scottish agricultural sector and for the employees that are involved in each of these plants around the country, that we move quickly to conclude a sale process that will deliver some continuity in the marketplace.”