B&M snaps up retailer Heron Foods in £152m deal

The deal gives B&M 251 discount convenience stores, mainly in the North of England, which last year generated pre-tax profits of £8.6m on sales of £274.4m.

The acquisition “will allow B&M to develop and roll out a complementary, proven and profitable discount convenience grocery brand”, the retailer said.

The two businesses have a simlar customer profile.

B&M said: “Convenience is one of the areas of growth in grocery retailing today, although much of this growth to date has been based on premium pricing.

“The board of B&M believes that Heron’s expertise and attractive existing store portfolio, when supported by B&M’s proven sourcing, retailing and store roll-out capabilities, can bring an attractive new customer value proposition in an expanding sector of the grocery market.”

Heron Foods employs 3,800 people and carries 1,200 SKUs including ambient, frozen and chilled foods. Stores average.2,500 sq ft of retail space compared to B&M’s UK average of 19,000 sq ft.

B&M chief executive Simon Arora said: “B&M is already the UK’s leading general merchandise discount retailer, serving 4 million shoppers per week.

“The addition of a complementary, proven discount convenience grocery brand to our own structural growth story gives the combined business an even longer, exciting growth runway.

“I look forward to working with David and Andrew Heuck and the Heron team to drive forward our shared ambition to deliver exceptional value for money to shoppers across the UK.”

The total enterprise value of the deal is £152m, including assumption of Heron Food’s debt.

An initial cash consideration of £112.1m has been paid. Up to £12.8m of deferred cash consideration may become payable based on the EBITDA performance of Heron Foods up to March 31 2019; this is included in the £152m enterprise value figure. 

B&M expects the acquisition to be immediately earnings enhancing.