No dismay despite rights issue snub for Berisford

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The Independent Online
The City inflicted an embarrassing snub on Berisford International, the kitchens and joinery group, yesterday when the company's £317m rights issue received only a 54 per cent take-up.

Berisford, which owns the Magnet kitchens business, was raising the money to fund the £200m acquisition of Welbilt, the American catering equipment maker, that was announced in December.

Hoare Govett,which was underwriting the issue, was forced to step in and place the debts with other institutions. The shares finished 11.5p lower at 230.5p.

Some analysts blamed the failure on nervousness about the Welbilt deal caused by fragile confidence in consumer spending. However Berisford said the main problem was the scale and complexity of the deal.

"It was a very big issue and the company has a very narrow base of shareholders," a spokesman said. "It only needed one or two to say `Sorry, no not this time,' and it made a big difference."

Eight groups, including Associated British Foods, and Jay Pritzker, chairman of the Hyatt Hotels corporation, own more than half of Berisford's shares.

Commenting on the poor take-up, Berisford's chief executive, Alan Bowkett, said: "We are not surprised given our shareholder list and [the fact that] the stock market has not shown a great level of interest in new issues of late."

Johnny Townsend, vice-chairman of corporate finance at Berisford's advisers, Hoare Govett, said he viewed the 54 per cent figure as an unqualified success. "Personally, I'm delighted with it. It was a unique deal structure for a company that has not made a profit under its current management and still has the share register of a £90m company. It's the most satisfying deal I've done in a long time."

Berisford has undergone a bewildering transformation since Mr Bowkett bought into the group in 1992.

Initially a commodities company, it acquired the Magnet kitchens business last year and the Welbilt deal will give the company a market capitalisation of more than £600m.

The process has made Mr Bowkett a paper fortune. In January he made a notional paper profit of £6.4m in a single day when Berisford's shares soared after coming back from suspension following the Welbilt bid.

He later used his share options to acquire more than £4m worth of shares in the company for £1.46m.

Mr Bowkett, who was already a wealthy man following a successful management buyout, defends his share options, saying that before his arrival Berisford was a company going nowhere.

The business has lost nearly £200m over the last five years but in December Mr Bowkett announced the company's first dividend since 1989.

With Welbilt, Berisford is acquiring a business that makes the grills and ovens for fast food chains such as McDonalds, Pizza Hut and Kentucky Fried Chicken.

Mr Bowkett plans to expand its interests into Latin America and the Far East. "I'm very excited about it," he said.

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