Background
Palmer & Harvey (“P&H”) is the UK’s largest delivered wholesaler with sales of £4 billion, supplying the independent and multiple retail trade nationwide with a broad range of ambient, chilled and frozen products
P&H is the UK’s 4th largest private company and is owned by its management and employees. This culture of employee ownership has been a significant driver in the Group’s success, with previous MBO transactions in 1988 and in 2002
Following a strong period of growth and a change in the executive management it was decided to undertake another sponsorless MBO, enabling existing shareholders to part-realise their investment in a tax efficient manner and to create new employee share ownership opportunities
Process & Outcome
Close Brothers was appointed to advise on the feasibility, implementation and financing of the MBO
Within an extremely tight timeframe, driven by the impending change in CGT legislation, Close Brothers undertook and managed a tightly focused debt raising alongside a complicated Takeover Code governed process
The financing was implemented against the backdrop of challenging credit market conditions. Our focused approach enabled rapid clubbing of two lenders offering to hold the majority of the debt facilities, with minimal market testing due to the presence of a third credible bank in the background
Financing was successful with £330m of all senior debt facilities arranged consisting of receivable financing and term loan facilities
The transaction provided a very significant cash realisation for shareholders and allowed for payment of ongoing preference share dividends, both highly significant gains given the challenging debt market conditions, as well as providing sufficient liquidity to implement P&H’s growth plan
Testimonial
Christopher Etherington, Chief Executive of Palmer & Harvey, commented
“Close Brothers’ advice was instrumental in achieving this complex restructuring of the share ownership of P&H. Close Brothers’ intimate knowledge of debt markets allowed P&H to raise sufficient funds to support the MBO and drive the Group’s growth strategy. I was particularly impressed with the ability of the team to deliver the challenging buy-out and refinancing process in a short timeframe, against tough debt market conditions. I would not hesitate to recommend Close Brothers to other parties."
For more information regarding this transaction, please contact:
Richard Grainger, Tim Evans or Dan Gibney – M&A
Jonathan Trower, Phil Gunter-Rees or Peter Park – Debt Advisory on +44 (0) 20 7655 3100.