Reports surface of Dunbia, 2 Sisters merger

In the past five years, 2 Sisters bought Northern Foods and Vion's UK red meat division
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Reports have surfaced regarding a merger between UK meat processing giants Dunbia and 2 Sisters.

The claim first appeared in Meat Trades Journal’s sister title The Grocer, with a source claiming the two parties were in exclusive talks and that due diligence was underway.

The two companies have refused to comment officially on the situation. However, it has been widely reported that Dunbia has been exploring financial options for the business, with a view to a potential sale.

A teaser document was reportedly being prepared to go out to interested parties at the end of last year.

Then in January, the Belfast Telegraph linked Brazil’s JBS, the company that bought poultry processor Moy Park in 2015, to a potential bid for Dunbia.

All went quiet again until this latest development.

Commenting on the likelihood of a tie-up between Dunbia and 2 Sisters, one industry commentator said: “I had heard they [2 Sisters] were rumoured to be one of the interested parties. They are one of the more obvious players, although one would have thought they have enough on their plate at the moment.”

2 Sisters has been extremely acquisitive over the past five years, notably buying Northern Foods in 2011 and Vion’s UK red meat business in 2013 and working to integrate the two businesses since then. “Given everything they have with Northern Foods, I wonder why they would want to take on something like this, but Ranjit is a man for a deal,” said the commentator.

A merger with Dunbia would give 2 Sisters a stronger hold on the red meat sector, with much of the company’s revenue still driven by its poultry operations at the moment.

2 Sisters also recently announced it aimed to create 200 jobs at its facility in Derby, which would focus on producing meal options including kebabs, ready-to-eat chicken and ready to cook chicken. The factory was the former site of S&A Foods.

Last month, rumours emerged of 2 Sisters’ intention to sell its Fox’s Biscuits division to Burton’s Biscuits.

2 Sisters clocked up like-for-like sales of £773.6m and adjusted pre-tax profit of £164.5m in the 52 weeks ending 1 August 2015 and employs 23,000 staff.

Dunbia, meanwhile, posted sales of £826m and pre-tax profit of more than £6.5m in the year to 29 March 2015. The County Tyrone-based red meat firm employs more than 4,000 people across the UK and Ireland.

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