Wholesale giant Kitwave has unveiled its latest acquisition, marking a significant expansion in its operations.
The £70m deal to acquire Gloucestershire-based Creed Catering Supplies will be financed through a mix of increased banking facilities and a capital raise.
Details of the Acquisition
Kitwave, headquartered in North Shields, has revealed a substantial £70m agreement to acquire Creed Catering Supplies. This transaction is strategically designed to bolster Kitwave’s presence in the foodservice industry, broadening its reach across the United Kingdom. The deal comprises an initial £60m cash payment, with an additional £10m contingent on performance milestones over the next two years.
Funding for this acquisition will come from an enhancement of Kitwave’s banking facilities, alongside a successful capital raise generating £31.5m. The group has placed 10.1m shares on the Stock Exchange, priced at 305p per share, underscoring investor confidence in their growth trajectory.
Strategic Impact and Growth
This acquisition is anticipated to significantly enhance Kitwave’s financial scale, elevating its revenues to approximately £800m, and extending its geographical footprint. The integration of Creed’s national delivery network is expected to catalyse both organic and acquisitive growth opportunities, reinforcing Kitwave’s market position.
Creed Catering Supplies is well-regarded in the industry, serving sectors such as leisure, hospitality, education, and care. With revenues of £124.2m and an operating profit of £7.8m last year, it presents a profitable venture for Kitwave.
Executive Insights
Ben Maxted, Kitwave’s chief executive officer, expressed his enthusiasm about the acquisition stating, “Creed has an exceptional heritage and is one of the UK’s leading foodservice wholesalers, so we are delighted to have reached this agreement which will extend our foodservice division.”
He further highlighted that the acquisition would bridge Kitwave’s operations in the North and South, creating a fully integrated national delivery network. This aligns with their longstanding buy-and-build strategy aimed at enhancing group earnings and delivering operational synergies.
Mr. Maxted also praised Creed’s dedicated and experienced team, looking forward to their collaboration to drive the company’s growth.
Kitwave’s Growth Trajectory
Founded in 1998 with a single confectionery cash-and-carry in North Shields, Kitwave has grown exponentially over the past 13 years through a series of strategic acquisitions.
Listed on the London Stock Exchange in 2021, Kitwave reported a turnover surpassing £600m and an operating profit of £29.3m for the year ending February. This growth is a testament to its robust acquisition strategy and ability to integrate new businesses effectively.
The Creed acquisition follows Kitwave’s recent purchase of Total Foodservice Solutions for £21m in March, showcasing its continued commitment to expanding its market reach and capabilities.
Market Reactions and Future Prospects
The market has responded positively to Kitwave’s capital raise and strategic acquisitions. Investors see the Creed deal as a significant step towards further market consolidation.
Kitwave’s success in raising £31.5m through the stock exchange highlights strong investor confidence in its future. The group’s proactive approach to expanding its operations through meaningful acquisitions positions it well for ongoing growth and profitability.
The creation of a national delivery network through this acquisition is expected to streamline operations, reduce costs, and enhance service delivery across various sectors.
Conclusion
The acquisition of Creed Catering Supplies signifies a pivotal moment for Kitwave, enhancing its market position and operational capabilities.
With a strengthened financial outlook and expanded geographical reach, Kitwave is well-positioned for sustained growth and success in the competitive foodservice industry.
The acquisition of Creed Catering Supplies by Kitwave underscores the latter’s strategic focus on growth and consolidation within the foodservice industry.
By leveraging Creed’s established market presence and integrating their operations, Kitwave aims to continue its trajectory of success and expansion.