Hilton Food Group confirms interest in Icelandic Seachill
In a statement today, Hilton confirmed it is “at an early stage of discussions in relation to such a transaction”.
Hilton added: “There can be no certainty at this time whether any agreement on such transaction will be reached and a further announcement will be made as and when appropriate."
It is understood that Hilton is in exclusive talks with Seachill owner Icelandic Group, which was created by 16 Icelandic pension funds.
Icelandic Seachill supplies own label and branded chilled fish as well as fish cakes, party food and prawn cocktails to the UK retail multiples. The company, which has also entered the frozen sector, generates most of its sales through private label but it also owns The Saucy Fish Co. brand. This is the largest chilled wet fish brand in the UK and is stocked in a number of retailers, including Sainsbury’s and Waitrose.
Icelandic Seachill generates annual sales of €290.6m (£260m) and employs around 1,400 people across three factories. 2016 EBITDA stood at €11.6m (£10.4m).
Expanding Hilton’s product portfolio
If the deal goes through, it will mark Hilton’s first foray into the seafood sector. The move is in line with Hilton’s strategy to expand its product line-up and category reach.
Last year, the company launched its first business outside its core protein category, a frozen pizza unit supplying retailers in Poland and Sweden. Delivering its 2016 results in January, the company said it is “pleased” with the performance of the unit.
In the trading update, Hilton also stressed it has both the will and the means to invest. “The group's financial position remains strong, positioning us well for further expansion. Hilton remains well placed to deliver continued growth over the medium term and will continue to explore further opportunities to develop our business in both domestic and overseas markets," the company said.
Hilton closed out 2016 with net cash of €35.8m (£32m), meaning that a deal could at least partially be funded through cash-on-hand.
Strengthening retailer relationships
Icelandic Seachill is an important supplier to Tesco in the UK, one of Hilton’s key customers. According to analysts at Peel Hunt, this is likely to be a key factor in Hilton’s decision to pursue Icelandic Seachill.
“This would be an interesting move for Hilton and they would only do it if supported/encouraged by Tesco. It does fit with their It does fit with their strategy of broadening the product range to its key customers – having started in red meat, the company now produces a range of other products including pork and pizza,” Peel Hunt said in an analyst note.
“We would normally be cautious on a food company branching into a new area. However, Hilton is different and has proven that its model works over different product categories.”
