The Italian food producer behind Buitoni pasta has joined the £100m race to acquire Hovis, the 134-year-old British bread brand.
Sky News understands that Newlat Food is among the parties vying to buy Hovis from its current shareholders.
Sources said that Newlat, which is listed on Milan’s stock exchange, had lodged an initial offer for Hovis, although it was unclear on Friday how it was positioned in the auction of one of the UK’s best-known food brands.
Image: Premier Foods, which owns Mr Kipling, is expected to use the sale to offload its stake in the firm
Newlat specialises in producing dairy and wheat products, and has a substantial market share in its native Italian market as well as in Germany.
Its interest in Hovis adds Newlat’s name to a field of turnaround funds and private equity investors competing to acquire the firm.
This week, the British company – which is owned by The Gores Group and London-listed Premier Foods – filed results at Companies House for 2019 showing that it had increased its share of the UK bread market to 22% amid fierce competition with Kingsmill and Warburtons.
Sales are said to have surged during the initial part of the coronavirus pandemic, as British consumers stockpiled staple foods.
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Other bidders for Hovis include Endless, Epiris – the buyout firm which recently snapped up restaurant chains Bella Italia and Café Rouge – and Aurelius Equity Opportunities, Sky News reported last month.
RW Baird, the investment bank, is advising on the sale.
Premier Foods, which owns Mr Kipling, Bisto and Angel Delight, is expected to use the sale process to offload its 49% stake in the company.
It wrote off the remaining value of its Hovis stake four years ago.
Hovis employs more than 2,700 people and is focused on its bakery operations, having sold two flour mills in 2018.
Established in 1886, Hovis became one of Britain’s best-known food brands, cultivating a home-grown image with its famous 1973 television advert showing a boy pushing his loaf-laden bike up a steep hill.
It was named the UK’s most iconic TV commercial in a poll last year.
Like other producers, however, Hovis faces stiff challenges with the category in long-term structural decline as a growing number of consumers switch to gluten-free diets.
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The UK bakery market is estimated to be worth £4bn in annual sales.
Under the deal struck with Premier in 2014, Gores paid £30m for its stake, of which half was deferred and contingent on future performance.
The transaction was motivated in part by Hovis’s declining fortunes and Premier’s strained balance sheet, which has also prompted it to sell other well-known brands during the last decade.
Hovis is now run by Nish Kankiwala, a former Pepsico and Burger King executive.
Newlat and Hovis declined to comment.