Business

‘Viking’ brothers float £1.5bn ready meals firm Bakkavor

Ready meals giant Bakkavor has confirmed plans for a stock market listing
Simon English @SimonEngStand
10 October 2017

TWO “business Viking” brothers who were caught up in Iceland’s banking crisis are floating their UK food business at a value of up to £1.5 billion.

Lydur and Agust Gudmundsson are the majority owners of Bakkavor, a food supplier to major UK supermarkets including Tesco and Waitrose.

Lydur was found guilty of financial crime in connection to their investment in failed Iceland bank Kaupthing. Bakkavor, which provides ready meals, pizzas and hummus, was founded in 1986. The Gudmundssons own 59%, with the rest held by US hedge fund Baupost.

The American fund, an investor for less than two years, is looking for a partial exit, but will remain a shareholder after the November float.

The sandwich tycoons say they will sell “very few” shares, but could cash in some of their stake. They are looking to raise about £100 million to pay debt and fund expansion.

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The Gudmundssons held a 45% stake in Exista, the largest shareholder in Kaupthing and one of its biggest customers before Iceland’s banking crash. Lydur, 50, was sentenced to eight months in prison for share-related offences, though in the end served only three weeks of community service.

The Gudmundssons borrowed to fund Bakkavor’s expansion and came unstuck when the financial crisis hit Iceland’s banks in 2008. They were forced into a debt-for-equity swap in 2010 that shrank their stake in the firm, but linked with Baupost last year to take back control.

Lincolnshire-based Bakkavor has 19,000 staff, making a pre-tax profit of £63 million on revenue of £1.76 billion in 2016.

Simon Burke, who is to join as chairman, said: “Over the past 30 years, Bakkavor has grown to become the clear leader in the UK market for fresh prepared foods and a vital partner for retailers. Through that time, the business has retained its entrepreneurial edge while putting in place a hugely experienced management team.”

The float will be led by HSBC and Morgan Stanley. Barclays, Citigroup, Rabobank and Peel Hunt are involved.

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