The chilling effect of a competition inquiry
And are rescue deals the story of 2024?
Hello Rainmakers
There’s nothing like a market inquiry to send a chill through the M&A process.
Even if the attention of the Competition and Markets Authority (CMA) inquiry into Müller’s acquisition of the family-owned UK dairy company, Yew Tree Dairy comes to nothing, the very fact it is on the radar will obviously have a huge impact on deal values and risk appetite in that part of the food sector.
Don’t forget, this is our free Friday round up of deals and issues, and a reminder that you can subscribe and get access to a great archive of tasty stories twice a week.
ICED YOGHURT
If there’s one thing likely to stop a deal getting over the line, it’s a Competition and Markets Authority (CMA) inquiry, or investigation.
This week we reported on how the CMA has launched a merger inquiry into Müller’s acquisition of the family-owned UK dairy company, Yew Tree Dairy.
It’s considering if the merger could result in a substantial lessening of competition for goods or services across the UK.
Established in 1904, Yew Tree Dairy which is based in Skelmersdale, West Lancashire, produces fresh milk and cream. Following significant investment in recent years, the business now also specialises in milk powder production.
Shropshire-based Müller Dairy (UK) purchased Yew Tree in June, with plans to use its milk power production capabilities to grow Müller’s export business, drive supply chain resilience and “secure a positive future for the British dairy industry”.
Müller is also planning to “significantly invest in the capacity and capabilities of the Skelmersdale milk drying site” once the deal is completed, subject to CMA approval.
The CMA has invited comments from interested parties to help with its inquiry. Written representations about any competition issues must be provided by September 10.
As we saw earlier this year with the probe into competition in the vet market, these inquiries can put a block on any deal activity as it makes completion, and pricing, such a risk.
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TWO GREAT STORIES YOU MIGHT HAVE MISSED THIS WEEK
This week subscribers will have received two long reads.
On Wednesday, a day later than we usually would share due to the Bank Holiday, we gave you a long and detailed piece with venture capital enabler David Levine, a kind, generous and super interesting man who has great ambitions for tech, investment and making the world a better place.
Amongst many insights he shared was: “People say we need more investment funds here. That there's not enough money. They are wrong. There is more than enough money here, right? What we don't yet have is good enough quality venture scale businesses.”
He’s got a few tech investments ongoing; he’s recently closed two deals in Copenhagen, he’s also working on a project in Israel has “got stuff throughout the UK” as he puts it, as well as “one or two” in the US. “And again, he says, “that's about finding the right investor with the right type of investments at the right time.”
One thing you’ll get if you spend any amount of time with him is not only a studied ferocity - a passion - but also well thought through critiques of things you thought you knew.
The link to the full piece is here:
On Thursday, I let you in on a few trade secrets of business journalism and explained the debt I owe to the inspiration of writer Tom Wolfe, father of New Journalism.
Wolfe identifies four devices to tell the story: scene, dialogue, point-of-view, and status detail.
I’m not saying all our Rainmakers stories do this, but we try to do more than just basic fact-gathering, but to try and take the reader inside the world we’re trying to provide an account for.
It’s why I mentioned in my piece yesterday with David Levine that he speaks with a soft Irish accent, and that he has lots of coffees with people, though I could have added a lot more about how he dresses and how he holds eye contact more than most people, and some of his other personal interests. Honestly though, I had enough great material.
If we can provide the colour and the insight to a story, it makes it more readable, more relatable and hopefully more valuable to anyone subscribing.
As journalists, this kind of writing is more fun to do, it is livelier, and gives us the opportunity to speak to people directly, to spend time with them and understand the decisions that they make and gain insights into what was on their mind when they did so.
And you only get to do that, frankly, if you ask them.
FLOWTECH TO THE RESCUE
A trans-Pennine deal this week saw AIM-listed Skelmersdale-based hydraulics business Flowtech Fluidpower confirm a £350,000 acquisition of Bradford's Thomas Wright/Thorite Group, which it has bought out of administration.
In this case, it's especially good news to see such a long-established Yorkshire name preserved as the acquired firm - a provider of pneumatics, compressed air, vacuum and fluid-handling products - has been trading for more than 170 years.
Thorite had run into cash flow problems and suffered operating losses due to a mix of internal issues and market headwinds.
Rescue deals are becoming more common, it would seem.
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A STITCH IN TIME
Hobbycraft, and its out-of-town warehouses that sell planned fun, has new owners, after Modella Capital replaced long-standing investor Bridgepoint.
Bridgepoint had stayed around longer than the average paint-by-numbers set, having owned the retailer since 2010.
The chain has grown to have 124 stores and may have already reached the point where hobbies stopped being fun. Its next set of accounts are expected in the coming weeks, but its 2023 financial year showed losses of £16m, falling like-for-like revenues, and a narrative that complained of fewer shoppers in store, fewer shoppers online, and signs of the crafting market weakening.
Modella has previously owned Paperchase and Tie Rack, although Bournemouth-headquartered Hobbycraft will want a different end to its story. A stitch in time, one hopes.
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KIT FOR FIT
We do wonder if when Trevor Palmer set up his Tank business back in the late 2000s he ever dreamed of owning a hefty chunk of one of his clients?
That's what's happened, though, after The Boda Group, which includes Nottingham digital marketing and PR agency Tank and brand communications agency Warbox, has initially acquired a 24% stake in Versaclimber UK, a fitness equipment firm based in Stourbridge, with plans to increase this to 48% over the next two years.
Palmer, managing director of The Boda Group, has served as a PR consultant for Versaclimber UK for over twenty years and was approached by the brand’s owner, Neil Kelford, to take a share in the business.
Tank and Warbox have gone great guns over recent years - it'll be interesting to see if this is a one-off deal, or the start of something beautiful.
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RAINMAKERS SEMINAR IN BIRMINGHAM
As the corporate finance community anticipates the end of a subdued and uncertain period, the upcoming Rainmakers Seminar in Birmingham in September will explore the challenge of becoming deal-ready for 2025.
With a more stable policy landscape expected following the general election and some economic headwinds easing, the seminar will concentrate on several key areas:
Current market demand and appetite
Funders’ primary areas of focus
The increasing significance of factors beyond financials, especially ESG and data
Opportunities within the Midlands market and Rainmakers’ role in driving growth
Hear from Katie Trout, director of policy & partnerships at the West Midlands Growth Company on what opportunities are available for the corporate finance community to engage with across the region.
A keynote speech from a leading West Midlands business figure will follow, offering their insights into working with Rainmakers on M&A proposals and securing investment.
An expert panel consisting of Tom Hustler, senior investment director at Palatine, Nick Gillott, corporate finance partner at Grant Thornton, Deepak Parekh, senior director at Shawbrook Bank, with more speakers to be announced.
RAINMAKERS CONFERENCE IS BACK IN 2025
The art of such deals is just the sort of thing which will pepper our 2025 Rainmakers Conference.
It’s being supported by BGF, Dow Schofield Watts, NorthEdge, Palatine, Shawbrook, Squire Patton Boggs, while PHD Industrial Holdings is a breakout room partner.
So save the date for Rainmakers 2025 – Wednesday 26 March, 2025 – and secure your place today at The Point, Emirates Old Trafford, Manchester.
It will bring more opportunities to network, more amazing speakers, more candid debate, more inspiring entrepreneurs, but also a chance to discuss the challenges of value creation.
The first Rainmakers Conference this March sold out, with more than 400 people attending to hear the insights and perspectives from entrepreneurs, investors and advisors, and to network with senior figures from across the corporate finance community.
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