The European Commission has asked the French Competition Authority (Autorité de la concurrence) to scrutinize details regarding the proposed sale of Nestlé’s Davigel SAS division to the Brakes Group. It will closely examine what the transaction’s economic impact would likely be on the domestic frozen food and out-of-home ice cream retail markets.
Davigel, based in Dieppe, France, employs more than 3,000 people at three factories that produce value-added vegetables, fish dishes, meat- and poultry-based ready meals, sauces and pastry products. Its extensive product line, much of it developed by in-house chefs, is in the range of 1,500 items.
The Ashford, Kent, England-based Brakes Group is a leading foodservice supplier in the United Kingdom, Ireland, France and Sweden. An acquisition of Davigel would significantly increase its presence in France, while paving the way for smooth entry into Belgium and Spain. Furthermore, it would secure Davigel’s food manufacturing capabilities and provide the group with exclusive rights to distribute Nestlé branded ice cream to the out-of-home market in France.
Over 65% of the vegetables and 69% of the seafood supplied by Davigel come with Ecolabels. This is much appreciated by school foodservice caterers as well as hospital and healthcare kitchen operators.
Vevey, Switzerland-headquartered Nestlé has owned Davigel since 1989, when it was purchased from Buitoni. The Nestlé Professional unit is a major supplier of frozen and chilled meal products to restaurants as well as to schools, hospitals, healthcare institutions and contract caterers in France and over 10 other countries in Europe and beyond. Approximately 990 million meals are produced and served to patients annually. Last year the company generated turnover of approximately EUR 750 million.
“This acquisition would be an excellent fit with the Brakes Group. We have long admired the Davigel business, its food manufacturing capabilities and Nestlé branded ice cream distribution,” said Ken McMeikan, chief executive officer, when initially announcing its desire to buy the company in April. “This would be another important step to continuing strong growth and build on our position as a leading European foodservice provider.”
The Davigel food processing factory in Noyal-Pontivy, Brittany, one of three operated by Nestlé in France, would become a Brakes Group asset following an acquisition. The other plants are in Offanville and Barbezieux.
Consummation of the deal would create the second largest foodservice company in France. While financial details have not been disclosed, it has been speculated that the sale could fetch up to EUR 300 (approximately £217.5 million) for Nestlé.
Brakes, which has been owned by the private equity group Bain Capital since 2007, began as a poultry supplier to caterers in Kent and London in 1958. In 1963 the company entered the frozen food distribution business in earnest, and six years later it began manufacturing frozen ready meals. Today the Brakes Group employs over 10,000 people at approximately 80 locations, and generates turnover exceeding £2.6 billion per annum.
