Speculation mounting over Dutch Grampian deal

Speculation is mounting that Dutch food giant Vion is on the verge of buying Grampian Country Food Group, the biggest supplier of meat and poultry to British supermarkets following media reports.

Both Grampian and Vion said they do not comment on press speculation.

The Sunday Telegraph reported that according to industry sources Vion had emerged as the preferred bidder for Grampian and the two sides were likely to enter exclusive talks to seal a deal within days

According to the Sunday Telegraph, Vion, which is privately owned and Europe's largest food producer, has been vying with CCMP Capital, a private equity group, in the final stages of the auction of Grampian. Several other foreign food companies, such as Brazilian giant Sadia, also submitted bids for Grampian, it added.

HBOS, which is Grampian's banker, is also understood to own a stake in the food producer of less than 20% and is thought to have been pushing for a sale of the company for some time.

Grampian, which is based in Aberdeen, processes nearly 3m chickens every week as well as large volumes of red meat and pork. It supplies major supermarkets including Tesco, Sainsbury, Asda, Morrisons, and Marks and Spencer and in addition to own-label products, also supplies foods branded as Highland Organics and Cookstown.

It employs nearly 20,000 people, and has a turnover of £1.8bn, with the majority of its operations in Britain and Thailand.

Grampian is understood to have made £5m of profit in 2006/2007 on sales of £1.8bn.