£434m offer for Brake Brothers sparks bid battle
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Your support makes all the difference.A takeover battle looked set to erupt yesterday for Brake Brothers, the UK's biggest supplier of frozen foods to restaurants, after an agreed £434m cash offer from a private equity group provoked a hostile response from a rival bidder.
Bidvest, the South African group that owns the British foodservice provider 3663, urged Brake Bros' shareholders to ignore a takeover offer from Clayton Dubilier & Rice of the US until the UK Government had ruled whether Bidvest's own approach would run into competition problems.
Brake Bros, which was put up for sale in March by its founding chairman, Frank Brake, ahead of his planned retirement, had earlier recommended its shareholders accept the offer from CDRP Acquisition, a division of the US private equity group, worth 825p per share.
Brake Bros yesterday insisted it had accepted the offer from CDRP in favour of a potential "acquisition of, or a merger with" Bidvest because it believed it represented "better value and certainty". Patricia Hewitt, the Secretary of State for Trade and Industry, is expected to rule later this week whether a tie-up between 3663 and Brake Bros, which would give the new company more than 50 per cent of the UK frozen food market, would be uncompetitive.
Any rival bid from the South African industrial support services group would struggle because Mr Brake and the rest of the Brake family, who own 59.1 per cent of the company, have given irrevocable undertakings to accept the deal.
One food sector analyst said the Brake family's decision was "puzzling" given the possibility that the regulators could give Bidvest the go-ahead. "The wisdom of Brake's management could come into question," said the analyst.
Mr Brake, who along with his family stands to receive around £256m from the cash offer, said he felt the deal "represents a successful conclusion to our strategic review announced in March [and] provides excellent value for shareholders". The offer represents a 39 per cent premium to the group's share price before it announced it would explore the possibility of a sale.
Roberto Quarta, the former chief executive of the aviation services group BBA and a principal of CDRP, said the company would focus on consolidating recent acquisitions made by Brake Bros in France before seeking expansion in Spain, Italy and Germany. The Brake Bros brand name and existing management, led by Ian Player, the chief executive, would remain, he added.
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