South African group starts auction for Brake Brothers

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The Independent Online

Brake Brothers, the UK's biggest supplier of frozen food to restaurants, yesterday drew the attention of Bidvest, the South African industrial support services group. Bidvest said it has made a formal submission to the Office of Fair Trading, seeking consent for a possible acquisition of Brake Bros.

The potential suitor said there was "compelling commercial logic" to combining Brake Bros with its own UK food-supply service and use the business as a springboard to expand further in Europe. It has already spent £200m over the past three years to buy rivals, including Jacobs Holdings.

Bidvest did not say how much it would be willing to pay for the business, which is valued at just short of £400m on the stock market.

Brake Bros put itself up for sale last month as it revealed its founder and chairman Frank Brake, 68, planned to retire. Bidvest has already bought smaller rivals such as Jacobs Holdings. Shares in Brake Bros climbed 3 per cent to 757.5p.

"It makes strategic sense for Bidvest," said Ilan Stermer, an analyst at Barnard Jacobs Mellet. "There's plenty of overlap in the UK and it would extend their business into France."

Bidvest said talks with Brake Bros to seek an agreed takeover could follow if the OFT backs a merger of the two.

"The issue is market share: Brake Brothers has about 29 per cent of the UK market and Bidvest has about 12 per cent," said Charles Hall, an analyst with WestLB Panmure.

The two companies target restaurants and pubs as customers for frozen products.

The UK company's 2001 profit slumped 19 per cent to £20.9m on reorganisation costs, foot-and-mouth and a drop in travel after the 11 September terror attacks.