Bunzl announces £339m acquisition of Nisbets

Bunzl has signed an agreement to acquire catering equipment distributor, Nisbets, for £339m.

The distribution and services group will take an 80% stake in Nisbets, with founder, Andrew Nisbet, remaining as non-executive director and retaining a minority interest.

Nisbets was launched in 1983 and distributes catering equipment and consumables in the UK and Ireland, Northern Europe and Australasia.

In 2023, Nisbets generated £498m in revenue, with a profit before interest, tax and amortisation of £40.2m.

The deal signed between the two firms includes put/call options that enable Bunzl to acquire the remaining 20% stake in the future, based on Nisbets’ financial performance.

Chief executive officer at Bunzl, Frank van Zanten, said: "The acquisition of Nisbets is an exciting step for Bunzl. Andrew Nisbet has built a high-quality business, with a well-respected management team. The business is complementary to our operations in the catering equipment sector and will enhance our own brand offering and digital capabilities."

The deal comes after Bunzl announced a move to acquire its first business in Finland, Pamark, in January.

The acquisition of the distributor of cleaning and hygiene, healthcare, food service, and safety products, is expected to close later this month, increasing the number of countries that Bunzl operates in to 33.

In 2023, Pamark generated €56m (£49m) in revenue.

Bunzl announced that in 2023, its revenue fell by 1.9% to £11.8bn, while its underlying profit increased by 6.2% to £944m.

Equity analyst at Hargreaves Lansdown, Matt Britzman, added: "There was some revenue weakness over the past year, a mix of volumes coming down in some geographies and normalising prices. A lot of Bunzl’s pricing is correlated with inflation, so as costs for the underlying raw materials come down so does Bunzl’s top line. The key thing to remember is revenue’s still around 28% higher than 2019 levels. Looking forward, volumes should come back but the pricing weakness is a potential headwind for the new year.

"Strong cash generation and improving margins were highlights of last year. Acquisitions continue to do a lot of the work. There’s added risk with this approach, but in a heavily fragmented industry the deal pipeline is plump and Bunzl’s an expert at finding businesses with good margins at decent prices.

"As a defensive growth business, there’s a lot to like. If Bunzl can contain the ongoing pricing weakness, then the pipeline of accretive acquisitions can do its job to prop up margins over the coming year."

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