LONDON (Alliance News) – B&M European Value Retail SA on Wednesday announced plans to enter the convenience food space by buying discount convenience retailer Heron Food Group Ltd for up to GBP152.0 million.
The value retailer will buy Heron Food through its subsidiary EV Retail Ltd.
Heron Food operates predominately in the north of England and operates 251 stores. In 2016, it delivered revenue of GBP274.4 million and a pretax profit of GBP8.6 million. Like-for-like revenue rose by 3% year-on-year.
The business employs 3,800 people and sells products including ambient, frozen and chilled foods.
B&M paid an initial cash consideration of GBP112.1 million on exchange, and a further GBP12.8 million in cash may be payable later based on Heron Food’s earnings up to March 31, 2019. The initial payment was satisfied from B&M’s existing cash resources.
B&M – which mostly sells products including furniture, toys and household appliances – said the acquisition will enable it to develop and roll out “a complementary, proven and profitable discount convenience grocery brand”.
The company said it will continue to expand and develop the Heron Foods business alongside its existing management team, initially through the addition of between 10 and 20 new stores per year.
B&M expects the acquisition to be immediately earnings enhancing.
“The addition of a complementary, proven discount convenience grocery brand to our own structural growth story gives the combined business an even longer, exciting growth runway. I look forward to working with David and Andrew Heuck and the Heron team to drive forward our shared ambition to deliver exceptional value for money to shoppers across the UK,” B&M Chief Executive Simon Arora said.