Berisford cooks up pounds 447m deal with Scotsman of US

BERISFORD, the company that makes chip fryers for McDonald's, yesterday said it was buying the US refrigerator group Scotsman for pounds 447m in an attempt to become one of the world's largest food-equipment makers.

Berisford announced it was paying $33 a share in cash for Scotsman, or pounds 231m. It will also take on debts of pounds 216m at the highly leveraged US group.

The deal will make the British company one of the biggest suppliers of food equipment to companies such as McDonald's, Burger King, Pizza Hut and KFC. Wal-Mart, the supermarket behemoth buying Asda, is one of Scotsman's main customers.

David Williams, chief executive, said the deal was a response to a desire among big customers to have one supplier for all their equipment needs. Buying Scotsman would allow the company to supply coolers to the same people who bought its fryers. "This makes a more complete business," said Sanjay Jha, an analyst at Williams de Broe. "If Berisford had not made a deal, it would probably have been bought."

Berisford also hopes to use Scotsman's sales channels to build its presence in the rapidly growing "home-meal replacement market", where customers buy meals hot at the shop and take them home in a thermal bag. It recently bought Aladdin, a catering-equipment maker. New technology is being developed to create bags which can heat meals as they are carried home.

Berisford, which employs more than 10,000, expects cost savings of pounds 10m a year by closing three factories where production is duplicated. Scotsman employs more than 4,000 staff.

Mr Williams said the strategy was to align itself with the needs of big customers such as Taco Bell, which is seeking to serve one customer every six seconds. He declined to say how many job losses were expected, though redundancy and other costs will come to pounds 6m.

Berisford will seek a secondary stock listing in the US. John Sclater, its chairman, will retire in January 2000. Peter Brooks has been appointed deputy chairman and chairman-designate. The deal is being financed through loans of pounds 381m from Barclays Bank and pounds 190m from NatWest. Executives admitted Berisford would be highly geared but said interest cover would be four times by next year. The group will still have pounds 150m for further acquisitions.