LDC backs MBO at £20m biscuit firm

Private equity investor LDC has backed the management buyout of Manchester-based Hill Biscuits.

Following the transaction, the 150-year-old business plans to kick-start a multi-million-pound capital investment programme to expand its production capacity and develop new products to take advantage of rising demand from current and new customers.

Hill, which has annual sales of £20m, also said it would be seeking strategic acquisitions to build further scale and diversity, as well as implementing a new international sales strategy to accelerate growth in overseas markets.

Originally founded as a small shop in Dukinfield, Manchester by John and Sarah Hill in 1855, the company is now one of the UK’s major biscuit manufacturers, producing more than 30 million biscuits each week for the retail and foodservice markets.

Key products include digestives, ginger nuts, custard creams, bourbons, malted milks and gingerbread men.

The company says it is focused on providing quality, value for money products, which are sold under the Hill brand as well as retailer private label, with key customers including the UK’s biggest discount retailers in the UK and mainland Europe.

The buyout was led by managing director Steven Wetherby, whilst LDC’s investment was led by Simon Braham, John Clarke and Ged Gould. The investment provides an exit for the Bennett family, which originally bought the business out of Rowntree in 1980.

Wetherby said: “Partnering with LDC will enable us to drive significant investment into the business for the benefit of our customers, adding greater production capacity and innovative new ranges, whilst staying focused on our core offering of quality, value for money products.

“LDC’s experience and track record in the sector made them an ideal fit for us. They also quickly understood our ambition for the business and shared our passion for growth. This unlocks a whole new future for a business with a fantastic history.”

Simon Braham, investment director at LDC, said: “Hill is a classic example of a business with latent potential. The shareholders have built a great business over the years and the current management team has an ambitious vision for forward growth. We’re excited to become part of the next chapter for Hill in developing its scale, strength and success both at home and overseas.’’

The deal marks the third transaction this year for LDC’s North West team, following the £38m management buyout of Fishawack, the specialist provider of scientific communications service, and its multi-million-pound investment in ChargePoint Technology, the high growth manufacturer of specialist high containment and sterile transfer valves, both in January earlier this year.

Over the past three years the firm has invested more than £250m and completed 14 new transactions out of the Manchester office alone.

Ged Gould, senior director at LDC, said the firm’s recent investment activity was a barometer of the health and wellbeing of the North West economy, as well as a signal of the optimism amongst owner managers to go for growth.

He said: “There are businesses just like Hill across the North West with exciting prospects ahead. We’re keen to get the message to those management teams that LDC has the appetite and capital to support their expansion.”

Banking facilities were provided by Yorkshire Bank (Jane Hartley, senior director and Chris Walls, associate director, corporate and structure finance) and banking legal advice by Addleshaw Goddard.

Owen Malton, regional head, corporate and structured finance, Yorkshire Bank said: “Hills have a strong market position with a high quality management team and proven track record. We are delighted to provide funding to this established business and look forward to supporting the management team in their next stage of growth.”

The vendors were advised by Zeus and DWF, management by Pannone and LDC by Mazars and Pinsent Masons.