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Chief executive heads MBO at Palmer & Harvey

Written by Ben Fountain
Wednesday, 09 April 2008
Wholesale and distribution giant Palmer & Harvey, which has major bases in East Anglia, has been bought by senior management in a deal worth £440 million. The buy-out is headed by chief executive, Chris Etherington, and will offer management and employees 50 per cent of shares in the new holding company. Palmer and Harvey has distribution centres in Wymondham, Norfolk and Brandon in Suffolk and is the UK’s leading delivered wholesaler and distributor for both the independent and multiple retail trade. Barclays Commercial Bank is providing majority finance to support the MBO. This is the third MBO that Barclays has supported for the Palmer & Harvey Group – a customer for more than 80 years. Barclays Commercial Bank and Bank of Ireland asset lending subsidiary, Burdale Financial Ltd, are jointly arranging a funding package comprising a £280m Receivables Finance Facility and a £50m senior debt facility. Barclays is also providing a loan note guarantee facility of approximately £117m as part of the transaction funding. With a turnover of £4 billion, the Palmer and Harvey Group is the UK’s fourth largest privately owned company and supplies food, confectionery and tobacco to over 61,000 customers. This deal reflects the relatively robust nature of the wholesale food and grocery sector. Despite the tough high street retail environment, a less volatile nature should position the wholesale food and grocery sector to fare better than other retail sectors in the current economic uncertainty. According to ONS data, last year the wholesaling sector grew by 3.4 per cent. Chris Etherington said: “This is a very exciting time for the company as we put in place the financial foundations for the future growth of the business. Not only will this restructuring create significant share ownership opportunities within the group, we have also secured the best management team to build on our strong heritage by delivering further growth and expansion.” Paul Ambrose, director, Barclays Commercial Bank Leveraged Finance, added: “This transaction is indicative of the relative stability of the wholesale food sector in comparison to other retail and wholesale sectors. “Palmer and Harvey’s recent acquisitions of south west based wholesaler T&A Symonds and Leeds based Young’s further strengthened its position as the UK’s biggest wholesaler and I believe that its management team is well positioned to further implement the group’s growth strategy.”