Derek Pain: SnackTime's tasty takeover brings hope of bigger things to come
No Pain, No Gain
Saturday 02 October 2010
SnackTime appears to have pulled off a remarkable deal, although the stock market greeted its initiative with complete indifference. It is, in effect, a reverse takeover, costing nearly £11m against the £10.3m vending machine group's capitalisation.
The expansion-hungry snacks business is acquiring Vendia, which spreads nationally operating under four brand names. The logic of the deal seems to be that Vendia is big in hot drinks whereas SnackTime is still largely a cold drinks supplier. A happy mix, then. It is – almost – an all-paper deal with shares and warrants, with lock-ins, making up all but £500,000 of the consideration. And even that cash outlay is on a deferred basis. The stock market was, however, completely unimpressed, leaving the shares, as I write, unchanged at 137.5p
SnackTime, recruited to the No Pain, No Gain portfolio a year ago, has long been keen to add hot drinks to its menu. It has a fledgling operation created from scratch but no doubt sees Vendia as a quick-fix solution. As a result of this deal, the enlarged group will have 30,000 customers and will rank as the nation's fourth-largest drinks and snacks vending machine operator.
By SnackTime standards it is clearly a hearty meal. That, of course, could be a problem. The danger of acute indigestion must be high. Blair Jenkins, the chief executive, recognises that possible problems could lurk and has instituted a series of management changes. From the day it became a portfolio constituent, SnackTime has made no secret of its expansion agenda. Earlier this year, it paid £1.5m for what was then described as its biggest rival, MBM Systems. It makes no secret of its desire to become Europe's biggest drink and snack vending machine operator.
Last year, it achieved a sharp increase in profits, but in strict terms suffered a loss. Reorganisation and rebranding costs, plus setting up a marketing department, did the damage. Perhaps that is why Mr Jenkins does not expect the latest deal to be earnings-enhancing until the year ending March 2012.
Vendia shareholders will control 29 per cent of the enlarged capital, sharply reducing the stake of Elderstreet, the investment group that has a long involvement.
Another constituent, Lighthouse, has produced interim results. The figures were encouraging with revenue up 11 per cent and pre-tax profits emerging at £117,000 against £56,000. The accountancy and wealth management group has £12m stashed away in the bank. I regard Lighthouse's low share price as one of the mysteries of the stock market. It is profitable, dividend paying (a 0.12p interim will be distributed next month) and has sufficient cash in the bank to cover its capitalisation.
Other portfolio members have been making waves. Booker, the cash-and-carry chain, indicated that interim results will be strong by revealing that first-half sales were up 5.5 per cent with a 6.1 per cent gain in the second quarter. It has £10.1m in cash compared with a £4m debt this time last year. Stockbroker Evolution Securities has a buy recommendation on the shares. And Mears, the support services group, has, intriguingly, teamed up with British Gas to provide energy-efficient social housing. The first deal should be clinched towards the end of the year.
Mears has also acquired social housing contracts previously conducted by its failed rival, Connaught. Most of the stricken group's arrangements went to construction group Morgan Sindall. Whether the new providers will make much cash out of the contracts remains to be seen. After all, Connaught seems to have excelled in signing up ruinous deals.
The portfolio's two blue-chips continue to receive stockbroker support. Charles Stanley has an "accumulate" tag on Whitbread and Seymour Pierce is still running with a 320p target on security group G4S.
It has been a mixed few weeks for G4S. The South African operation has been extended through a modest buy but in the US it lost a Nasa contract covering 14 installations. It still has contracts for six Nasa centres. And the powerful institutional investor, Credit Suisse, seems to have given up on the security giant. It once had more than 8 per cent but has now declared it no longer has a notifiable interest – so its stake is certainly below 3 per cent and I would guess is down to zilch.
Questions of Cash: Bupa costs bore no relation to what I'd been quoted
Five Questions On: Pensions advice
Problem gambling: Amid heavy advertising and a surge in remote sports betting, more and more 16 to 24-year-olds are now seen as 'at risk'
Simon Read: Retirement advice is good - if it's impartial
The HiFX guide to managing corporate foreign exchange and international payments
- 1 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 2 Students offered grants if they tweet pro-Israeli propaganda
- 3 Exclusive: Cameron’s Big Society in tatters as charity watchdog launches investigation into claims of Government funding misuse
- 4 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
- 5 Israel has discovered that it's no longer so easy to get away with murder in the age of social media
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
A day in the life of Vladimir Putin: The dictator in his labyrinth
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar