Northern Foods sells business to relieve profit squeeze
sale of Cavaghan & Gray Seafood (C&GS) chilled and frozen
fish business to IFP Holdings, a subsidiary of Icelandic Group
(IFP).
This disposal continues Northern Foods' strategy of the past 18 months to focus on its core strengths. The move follows the sale of Fox's Confectionery, the Batchelors and Beck Smith grocery operations, the Emile Tissot foodservice frozen ready meals business and the Minsterley fresh chilled dairy products operation.
It also follows last month's departure of finance director Sean Christie, as new chief executive Pat O'Driscoll prepares an overhaul of the company. O'Driscoll has already reorganised the business from 16 operating units to four divisions, and has announced that the company's new strategy will be unveiled on 16 November.
C&GS procures, processes and/or manufactures added value fish products, particularly coated white fish and Scottish salmon, which are sold principally under the Marks & Spencer and Waitrose retailer brands. It also processes high quality fish for other food manufacturers, including Northern.
The net assets to be disposed of are £13 million plus £2 million of goodwill, of which £1.8 million has previously been written off to reserves. The proceeds will be used to reduce Group debt.
C&GS has two factories, one at Grimsby, which employs around 240 people and the other at Aberdeen employing 150 people. All these employees will transfer to IFP under TUPE. It is expected that the sale will be completed later this month.
"C&GS has good facilities, products and customers, and an excellent team of people," said Northern chief executive Pat O'Driscoll.
"However, Northern is a relatively small player in the UK fish market and we felt that it was in the best long-term interests of the business and its employees to sell it to a company which has real focus and scale in this area."
IFP is a leading Grimsby-based fish products company, which is already a major supplier to M&S.
Northern Foods, which supplies meals to retailers such as Marks & Spencer and Tesco, has been under pressure as the supermarkets demand ever lower prices from suppliers. Its profits have been in decline since 2001. In September the group announced the closure of two factories with 1,000 job losses. Production was to be switched to other plants to offset rising costs.
