Retail giant gobbles up £274m-turnover food group
Value retailer B&M has swooped for Yorkshire’s Heron Food Group in a £152m deal.
Heron, a discount retailer, operates predominantly in the North from its base in North Ferriby, East Yorkshire, with 251 stores in its portfolio.
B&M subsidiary EV Retail has now acquired the £274m-turnover retailer as it looks to expand its convenience brand. Last year Heron returned pre-tax profits of £8.6m. It employs 3,800 people.
Of the total £152m deal, £112.1m was paid by B&M today, with £12.8m deferred and based on EBITDA performance.
Heron Food Group’s stores average 2,500 sq ft of retail space compared to B&M’s UK average of 19,000 sq ft.
The acquisition of Heron will enable B&M to develop and roll out a discount convenience grocery brand.
Heron is currently managed and owned by Andrew, David and Michael Heuck. Michael Heuck is retiring from the business as planned, whilst Andrew and David Heuck remain in their existing trading and finance roles with Heron. B&M, alongside the existing Heron management team, will continue to expand and develop the Heron business, initially through the addition of between 10 and 20 new stores per annum.
Simon Arora, CEO of Blackpool-based B&M commented: “B&M is already the UK’s leading general merchandise discount retailer, serving 4 million shoppers per week. The addition of a complementary, proven discount convenience grocery brand to our own structural growth story gives the combined business an even longer, exciting growth runway.
“I look forward to working with David and Andrew Heuck and the Heron team to drive forward our shared ambition to deliver exceptional value for money to shoppers across the UK.”
David and Andrew Heuck commented: “We are delighted to be joining forces and working with B&M. Both companies share a vision to bring great value to customers and the combination of Heron’s skills with the expertise and resources of B&M will mean the creation of a potent new force in the structurally growing convenience sector. Today’s transaction secures for Heron’s loyal and hardworking workforce a perfect long term home within the B&M Group and provides an exciting platform for the roll-out of more Heron stores nationally.”
B&M was advised by BofA Merrill Lynch, PwC, Gordons and Addleshaw Goddard. The AG team was led by Partner Roger Hart, and included Oliver Hincks, Jo Cooper, Julie Hodkinson, Justine Delroy and Catherine Concannon.
Deloitte advised Heron Food Group on its sale.
The team was led by Dan Renton, director in Deloitte’s Leeds-based corporate finance team, supported by Marcus Tregoning, Osman Khan and Oliver McRae. Deloitte also provided transaction services support to Heron, led by transaction services partner Matt Henderson and corporate tax director Julie Campbell.
Dan Renton said: “Heron Food Group is a family-owned business that has carved itself an enviable niche delivering great value grocery products in convenience locations across the North, Midlands and Wales. The Heuck family has grown the business consistently over more than a generation to make it one of the UK’s leading independent grocery retailers, employing more than 3,800 people and serving around 1.2 million customers per week.
“The sale to B&M provides an opportunity to grow the business further with the additional support that a larger parent business can provide.”
Andrew Jackson Solicitors LLP advised the shareholders on the sale. Partner Andrew Funnell commented: “We were delighted to advise the Heuck family in this transaction and wish them well for the future”.
