Horse meat scandal prompts local business acquisitions

Wed, 06 Mar 2013 | BUSINESS SALE

The horse meat scandal surrounding beef products stocked by supermarkets in Britain has spurred on the acquisition plans of one food company. 2 Sisters has bought Dutch company Vion's UK poultry and red meat processing business, which was originally put up for sale last November.

The decision to buy a local meat business comes just weeks after the horse meat scandal rocked consumer views on supermarket meat products. Tesco chief executive Philip Clarke has since pledged at the National Farmers' Union conference that the company will focus on local sourcing from now on to avoid a similar situation arising in the future.

A statement from 2 Sisters to the FT confirmed that the purchase is directly related to this: "It's no coincidence that within a week of Philip Clarke, Tesco chief executive, standing up and saying Tesco will source all chicken locally, we are buying a company that sources poultry purely from the UK."

The price of the deal with Vion has not been confirmed but the acquisition is thought to be around the same size of the recent 2 Sisters' acquisition of Brookes Avana, which it bought from Premier Foods for £30 million.

2 Sisters had a turnover of £2.3 billion in the year to the end of July 2012, but this latest deal will boost that figure to around £3.3 billion. This puts the firm in a favourable position against its competitor Premier Foods, which has been taking an opposite approach and selling a number of its assets to concentrate its business.

Vion, meanwhile, has taken the decision to exit the UK in light of rising input inflation as poor harvests have pushed up the cost of livestock feed. These shifts in the market and 2 Sisters' appetite for acquisition appear to be putting the company in a good position for future expansion.

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