Abel & Cole, the online organic food grocer, is preparing its second attempt to sell the business – with an estimated price tag of more than £30m – following a stalled sale process last year.
The fruit and vegetable delivery firm is expected to issue an information memorandum to potential buyers next month, which could attract the interest of both private equity firms and retailers. Abel & Cole is working with advisers at the accountancy firm PwC to sell the business after turning around its performance in the past two years.
Keith Abel, the delivery firm's chief executive, founded the company in 1988 from the basement of a house in south-east London and it now delivers to more than 50,000 households each week. Abel & Cole grew sales by 25 per cent to £35.74m, for the year to 31 August, according to its latest accounts.
The UK's fourth and fifth biggest supermarkets, Morrisons and the Co-operative Group, which do not currently deliver food online, could request to see Abel & Cole's information memorandum. The online grocer Ocado, which has never made a pre-tax profit, will also monitor the situation carefully.
Mr Abel sold most of the business he founded to the buy-out firm Phoenix Equity Partners in October 2007, in a deal that valued the company at about £40m. But Abel & Cole's performance subsequently started to go downhill and it was forced into a debt-for-equity swap in early 2010 with its lender, Lloyds Banking Group. The bank remains its biggest shareholder, with Mr Abel and Phoenix retaining minority stakes. All parties declined to comment.
Mr Abel returned to turn around Abel's fortunes two years ago and it delivered pre-tax profits of £1.88m in the year to the end of August, with underlying earnings coming in at about £3m. Since then the online grocer is understood to have continued to grow sales and its bottom line, boosted by increased efficiencies, such as minimising food waste and its drivers delivering more food with each journey.
The internet accounted for 3.8 per cent of total grocery spend last year and is forecast to increase to 6 per cent by 2016, according to the food and grocery trade body, IGD.