Norish, the cold storage group with four outlets in Britain, has agreed to acquire Belvedere Warehousing Group, which imports and stores cocoa and coffee, for £7 million sterling (€10.5 million). This represents Norish's first expansion since it sold its Irish cold storage operations while retaining an interest in an Irish joint venture. Although Belvedere is a small acquisition, it represents a major deal for Norish and will boost its sales by more than 80 per cent and double the amount of outlets.
While Belvedere is in dry storage, Norish said it broadens the scope of its activities "into a market which has similar characteristics" to its existing business. It also indicates that Norish has now embarked on a plan to expand its operations. This followed the appointment of a new chief executive, Mr Paul Byrne, in the middle of last year. Mr Byrne said the acquisition provided Norish "with a platform for growth".
The acquisition is being made through its subsidiary, Norish Food Care. Norish said it would be earnings-enhancing.
Belvedere imports and stores cocoa and coffee for commodity dealers and manufacturers in Britain. It generated a pre-tax profit of £1.3 million sterling on turnover of £8.33 million in the 14 months to December 31st, 1998, compared with a pre-tax profit of £380,000 on turnover of £6.25 million in the previous year. The latter profit was well down on the £1.04 million recorded in 1995/96.
Mr Byrne said the sharp downturn in 1996/97 represented a glitch in the market that year as tonnage of cocoa slipped by 27 per cent. It did not happen in the previous nine years, he added. Belvedere has net assets of £2.9 million so the assets are being purchased at a substantial premium. The consideration consists of £4 million cash on completion and £3 million in non-interest bearing, bank-guaranteed loan notes, payable in equal annual instalments on the first, second and third anniversaries of completion. The payments are not tied to any earn-out.
Mr Brian White, the vendor, will continue as managing director of Belvedere for up to five years. Norish's chairman, Mr Brian Joyce, said trading was ahead of the corresponding period last year and the outcome for the full year should be satisfactory. Norish is in a strong financial position, with net cash of £1.1 million in the last balance sheet. The deal will put it on a gearing of some 60 per cent based on the initial payment, rising to just under 100 per cent if the loan notes are taken into account.
