Food Company Cooks Up £24m MBO

20/7/09

The Manchester office of Yorkshire Bank and private equity firm Key Capital Partners (KCP) have backed the management buy-out of TSC Foods Limited, a leading manufacturer of soups and sauces, in a £24 million deal.

Established in 1991, Scunthorpe-based TSC produces and supplies high quality chilled and frozen sauces, soups, entrées and dressings to the retail and foodservice markets. TSC is a key supplier of private label soups and sauces to major food retailer, Morrisons, and is the supplier of choice for soups and sauces to a number of high-profile restaurant and pub chains, including Mitchells & Butlers, Whitbread and Tragus.
 
In 2008, TSC entered the branded chilled soup market through its development of the Glorious! fresh soup range, which is endorsed by celebrity chef Marco Pierre White. The company now plans to continue the roll-out of this brand across all of the grocery chains, having already established a presence in Morrisons, Waitrose and Sainsbury’s.

KCP and Yorkshire Bank have backed five long-serving members of TSC’s management team and new managing director Jonathan Skofic in the buy-out of the business from previous managing director Bill Morran and fellow shareholders.

KCP has invested £6 million for a majority stake in the business, alongside senior debt facilities of £11 million provided by Yorkshire Bank’s Corporate & Structured Finance team. Exiting shareholders have also rolled over a proportion of their consideration into loan notes and equity in Newco.

Peter Smith, director with Yorkshire Bank’s Corporate & Structured Finance team in Manchester, said: “TSC has seen impressive growth over the past two years through careful control of costs and its policy of developing partnerships with clients. Together with the new managing director, Jonathan Skofic, it is well positioned to further develop the company and seek out new opportunities in the food sector.”

The KCP team was led by partner Peter Armitage and investment director Mark Buttler. Armitage commented: “We are delighted to be investing in TSC, a company with a reputation for excellent service, high quality and innovative market-leading products.

“With a talented and experienced management team, supplemented by a new managing director, we are confident that TSC will continue to grow and be in a strong position to take advantage of any upturn in consumer and business confidence over the medium term.”

Newly appointed managing director, Jonathan Skofic, has built an impressive career history since starting at Shell in the 1980s. After this, he joined Schroders in an M&A role, prior to undertaking a full-time MBA at Harvard. Jonathan then spent the major part of his career with Cott Beverages, one of the world’s largest non-alcoholic beverage companies and the world’s largest producer of own brand soft drinks for retailers, which he joined in 1994. During his time at Cott, Jonathan worked his way up from UK operations director and UK managing director to managing director for Europe and Asia and, ultimately, vice president, business development international.

Skofic added: “The current market is an extremely difficult one in which to find investors, and in particular those with the foresight to consider investing in the foodservice industry. The team at KCP was prepared to go the extra mile, examine beneath the surface and get into the DNA of what made TSC tick.

“The company’s existing management team has done a tremendous job in driving TSC to its current, market-leading position. With the support of KCP and Yorkshire Bank, we now have the additional operational and financial support required to move to the next level.”