Jain Irrigation buys UK co Sleaford Quality Food

Jain Irrigation Systems has entered into an agreement to acquire 80 per cent stake in UK-based Sleaford Quality Foods, an industrial food ingredients supplier, for an undisclosed sum. However the deal size could not be revealed due to non-disclosure clause in the agreement. Sleaford had clocked revenue of £26 million (Rs 180 crore) in 2009. It has paid 4-5 times their EBITDA (earnings before interest, taxes, depreciation and amortisation). The deal will be funded through internal accruals.

According to market sources, the suppliers to food ingredient industry in India register an EBITDA of 20 per cent. However, the margins for similar industry in the UK are much lower at 10-12 per cent due to their inefficiency in achieving economies of scale.

Jain Irrigation plans to add value in Sleaford by providing large source base from India and other parts of the world where it has strong presence. The deal would provide the food division of Jain Irrigation access to a large market with value-added products.