Equity firm bids £434m for Brake Brothers
A private equity company has offered £433.7m for the food supply business Brake Brothers.
Clayton, Dubilier & Rice offered 825p-a-share, representing a premium of 39 per cent. The shares are currently priced at 592.5p.
The offer will now be published to shareholders. If 90 per cent approve, the deal will go through. The process will take up to a month.
At such a high premium it is thought the shareholders will return in favour.
Clayton, Dubilier & Rice is a US equity group with previous experience in the food sector.
The company bought US food services business Alliant Exchange before selling it on to Dutch supermarket giant Ahold for $2.2bn (£1.5bn) last year.
Brake, formed by brothers Frank, William and Peter, started supplying fresh poultry to the trade in 1958. The business began to distribute frozen foods in 1963 and was floated on the stock market in 1986.
Brake Bros, which has 300,000 customers in Britain and France, is being advised by Credit Suisse First Boston.
South African buyout group Bidvest, which had shown strong interest in acquiring Brake, immediately issued a response to the Clayton offer.
Bidvest had previously approached the OFT in April to seek approval to bid for Brake.
The company already owns food supply business 3663 First for Foodservice. It bought the business from Booker in 1999 for £122m. Booker is now part of the Big Food Group.
Brake combined with 3663 would take a 25 per cent market share, possibly raising competition concerns.
The Bidvest statement said that the company was expecting a response from the OFT on Friday, and indicated it was still prepared to make an offer.
The company was thought to be preparing a £500m bid. Bidvest would be able to make big savings by putting the Brake's and First for Foodservice businesses together, and therefore might be able to justify a higher price than bid rivals.
However, it is understood that Brake will sell to Clayton, if shareholders approve the deal.
