Hilton Foods acquires Seachill for £81 million
Published:  18 October, 2017

Meat packing business Hilton Foods Limited has agreed to acquire fish processor Icelandic Group UK Limited (Seachill) for £80.8 million (m). 

Seachill is one of the largest chilled fish processors in the UK. The company focuses on the three largest fish species in the UK and has successfully innovated and developed new products including The Saucy Fish Co brand.

Hilton intends to conduct a non-pre-emptive underwritten cash placing to raise gross proceeds of £55.9m to part-fund the acquisition through the issue of new ordinary shares, with the balance to be funded by a new debt package, comprising a new banking facility totalling £34m.

It will remain as a division within Hilton going forward, operating from three sites under current Icelandic Seachill CEO Simon Smith.

Robert Watson OBE, chief executive of Hilton, said: “The processing and supplying of fish and seafood into the UK is an attractive and growing market and one where we see considerable opportunities to build Hilton's business. Our initial discussions with key customers support this view and we look forward to broadening our offering to both our UK and overseas customers alongside our existing meat business.”

In a statement, Hilton said it had been “interested in processing and supply other proteins beyond red meat”.

“The group has been focused on processing meat, principally beef and lamb as well as pork outside the UK, and this will remain at the core of the business in the future. However, the group’s customers sell a broader range of protein products than just meat. It is clear to the group that its customers have an interest in the prospect of Hilton processing and supplying other proteins beyond red meat, based on the group’s expertise in sourcing, assembling, packing and distribution. The board sees this as an attractive and sustainable area to develop and grow Hilton’s business, and its initial discussions with key customers support this view.”

Hilton’s board believes the acquisition of Seachill, presents an “attractive and relatively low risk entry into the processing and supply of fish in the UK”.

Although a new category for the business, it believes fish is a growing consumer category in which the group’s existing customers have shown an interest, both in the UK and internationally, while consumer tastes and preferences for healthier lifestyles and menus underpin the attractive market dynamics for fish as a category.

Hilton added that the UK chilled seafood market in Great Britain has “displayed resilient growth evidenced by a 20-year track record of increasing market value”.

Future plans

Following completion of the proposed acquisition, Hilton has earmarked a number of opportunities to create value moving forwards. There is potential to: increase capacity and use Hilton’s experience in robotics and automated processes to develop state-of-the-art facilities in the assembling, packing and distributing of fish products; expand into overseas territories, using the Seachill management team’s expertise in the fish category; develop new products in the fish category in collaboration with its customers, broadening the range of products that the enlarged group can offer; and expand the proprietary ‘The Saucy Fish Co’ brand into other categories.

Retailer relations

According to Hilton, Seachill’s largest customer, Tesco, accounts for approximately 80% of its net sales and there is consequently significant reliance on one customer relationship. As Tesco is also one of Hilton’s principal customers, this acquisition is expected to strengthen Hilton’s existing relationship with Tesco through the supply of a new product category.