SATS – BT

SATS sells UK’s Daniels Group to Hain Frozen Foods for £159m

The sale will allow Daniels Group to achieve its full potential, says SATS

GROUND-HANDLER SATS Ltd has divested UK-based, non-aviation food unit the Daniels Group to Hain Frozen Foods UK for £159 million (S$321.8 million).

In a release to the Singapore Exchange yesterday, SATS said that its wholly-owned subsidiaries Singapore Food Industries (SFI) and Singapore Food Development (SFD) have entered into a share sale and purchase agreement with Hain Frozen Foods UK, a wholly-owned subsidiary of The Hain Celestial Group, for all the issued shares of S Daniels and International Cuisine (collectively the Daniels Group).

The Daniels Group – which manufactures and sells chilled drinks, ready-to-eat meals as well as fresh fruit and pudding – was acquired by SATS in 2009 as part of the latter’s takeover of SFI.

SFI is selling some 167.22 million ordinary shares in S Daniels and 1.28 million ordinary shares in International Cuisine while SFD is selling one ordinary share in S Daniels and 335,006 ordinary shares in International Cuisine.

SATS’ subsidiaries will be paid £151 million (subject to adjustments), plus potential deferred consideration of up to £13 million over the next two years assuming certain Ebitda targets are met by the Daniels Group.

Taking into account the fair value of the deferred consideration, the sale consideration is estimated to amount to £159 million in aggregate, SATS said in the announcement.

Tan Chuan Lye, acting chief executive officer of SATS, said: ‘While SATS has supported the Daniels Group’s growth since 2009 by investing in new production facilities and helping them build trading volumes with new customers, we believe that it made more sense if they were part of another company in the branded products market, who could help them achieve their full potential and growth in this space.’ He added: ‘With the Hain Celestial Group being a leading player in the branded packaged food space in the US, UK and Europe, this is a much better fit for the Daniels Group.’

For the financial year ended March 31, 2011, the Daniels Group earned a revenue of £177.1 million while Ebitda and net profit were £16.3 million and £8.1 million respectively.

According to SATS, the sale proceeds will go towards its capital base, to be used for working capital as well as to drive future growth and create value for its shareholders.

This deal comes weeks after SATS had clarified media reports which said that the group was in advance talks to sell the Daniels Group. At that time, SATS confirmed it was in talks with third parties in connection with the potential sale but also highlighted that there was no certainty of a definitive agreement.

Over the last year or so, SATS has made other investments such as taking up a 40 per cent stake in Saudi-based Adel Abuljadayel Flight Catering Company (AAFC) as well as a 50.7 per cent stake in Japan-based TFK Corporation.

A wholly-owned subsidiary, SATS Investments, has also recently entered into a joint venture with OCS Ventures to provide food and services to companies operating in remote areas – a bid for SATS to grow its non-aviation food business.

‘SATS remains focused on growing and strengthening our gateway services and food solutions businesses,’ Mr Tan said. HSBC acted as financial adviser to SATS in the disposal of the Daniels Group.

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