Dewhurst Butchers was once the largest butcher’s chain in the UK. Part of the Vestey Group founded in 1897, at its peak the chain of butchers shops had over 1,400 outlets. However, as the supermarkets began to dominate the High Street and the Vestey Group diversified away from its core business, the business fell out of favour and into decline.
Graphite Capital had backed the £17m in the Management Buyout of the most favourable 200 stores from the butchers chain alongside their other consumer corporate finance investments. They concurrently invested in a further 125 retail outlets. Having refinanced the business and restructured the property portfolio Graphite sought an acquirer for the trading business.
Our Strategy included approaching three different sets of buyers – trade from the food retail and distribution sectors, financial investors in the form of a secondary buyout and brand owners not necessarily associated with the food sector but who might be attracted to the opportunities associated with such a well-known brand. Whilst the opportunities to take the business forward were strong, we remained conscious that trading competition from supermarkets was fierce and we were up against time-pressure caused by the costs of the underperforming sites.
From a short-list of 3 preferred bidders we chose Lloyd Maunder Limited as the company most capable of taking the business forward and also most likely to deliver a transaction. At the time of acquisition, Lloyd Maunder bought 109 stores and took on an additional 500 staff. Graphite Capital achieved a return of 2.0x their initial investment, or 38% IRR.
The key features of this transaction were related to a very interesting market dynamic – consumers moving away from supermarkets to buy their meat and keen to support their local ‘independent’ retailers whilst at the same time Dewhurst not being in exactly the right position to benefit from this market sentiment. A key part of our sale process was therefore to discuss and uncover those bidders that saw the potential within the market. Secondly, and as important, was the complexity of the leasehold property portfolio – as part of the transaction over 100 leases had to be reassigned.
We will endeavour to improve the offer and service at the Dewhurst shops. Customers like the personal attention and expertise available in a butcher’s shop. That is something we know how to do well.
George Maunder, Director Lloyd Maunder Limited
