India’s Jain Irrigation buys controlling stake of 80% in UK food firm Sleaford Quality Food Ltd

India’s Jain Irrigation announced it had bought a controlling stake of 80 per cent in the UK’s Sleafood Quality Food Ltd. Jain Irrigation is currently the largest fruit and vegetable processing firm in India and its acquisition of the UK Midlands based Sleaford Quality Food Ltd will cost it about 10 million pounds. The deal was done at about three times Sleaford Quality Food Ltd’s earnings before interest, taxes, depreciation and amortization, as is the general norm for valuations and acquisitions in the food sector in the UK.

However, Jain has a call option for acquiring the remaining 20% stake in Sleaford. The UK firm is renowned for the supply of food ingredients to the Country’s food industry, both in the wholesale and retail space. Sleafood has been in business since for more than four decades now, with a large spectrum of food ingredients. Jain expects the acquisition to bring it one step closer to the UK market, with opportunity to enter into the large ethnic food market in the UK and possibility of addition of new products in Jain’s food division product range.

According to Anil Jain, managing director, the Indian firm’s food business is worth around Rs 520 crore and the investment marks a strategic move, as it serves as the firm’s entry point into the UK because Sleafood adds a threefold value to Jain. Other than that, the investment as well affords Jain the space to enter the retail market in UK. Even though the financial details were kept under wraps, analysts believe Sleaford is worth more than Rs 185 crore and the Jalgaon, India based firm must have paid more than Rs 150 crore to get 80% stake in the company.

Jain Irrigation is eyeing similar small-to-mid ticket buys to boost growth at its food processing division that is likely to clock 20 per cent topline growth in Financial Year 2011. Its food processing units do not run all through the year with supply limitations and crop seasonality rendering its plants idle for most part of the year, said Jain.

Jain Irrigation Systems is a multinational organization with global presence in 110 countries. The firm employs over 7,500 workers and manufactures a number of products, including drip and sprinkler irrigation  systems and components, integrated irrigation automation systems, PVC  and PE piping systems, plastic sheets, greenhouses, bio-fertilizers, solar water-heating systems, biogas plant on turnkey basis, wind hybrid energy and photovoltaic system.

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