Hovis Acquisition – Robert Lawson, Co-Founder and Managing Partner, gives his views in Food Manufacture

Hovis’ acquisition by Endless LLP from Premier Foods and Gores is ‘a great outcome’ for Premier Foods, according to Robert Lawson. He shared his views with Food Manufacture last week. Read the full article here.

“Hovis never fitted Premier strategy”

Robert Lawson in Food Manufacture

When they went into the arrangements with Gores they had a low confidence level that there would be a better outcome than writing off their investment. It seems Premier are £37m better off and have removed a distraction for senior management.

Hovis never fitted the strategy except at a superficial level. Premier’s strategy was about acquiring unloved great British brands, but they needed to fit into the Premier ambient grocery business model. Hovis, whilst unloved and great, operated through a completely different distribution model because of its short shelf-life and direct to store distribution model.

“Offloading this business is a huge step forward strategically for Premier”

Robert Lawson in Food Manufacture

Premier is increasingly getting on the front foot, and even able to contemplate bolt-on acquisitions. Before the RHM acquisition went so wrong, the business had a strong track record of adding value through small branded bolt-ons. Offloading this business is a huge step forward strategically, allowing Premier to focus on what it is good at.

“There remain inescapable truths about the Hovis business”

Robert Lawson in Food Manufacture

Management has done a fabulous job of turning around the fortunes of Hovis but there remain inescapable truths about the Hovis business. Its core markets remain in long-term decline despite favourable winds from COVID. Its factory base is very poor relative to much newer networks of its main competitors, Warburtons and Allied – for example the average age of a Hovis bakery line is more than 50 years.

Food Strategy Associates have worked on several bakery projects, including conducting Commercial and Operational Due Diligence of a Baked Goods and Gluten-free business last year.