Bidcorp’s relentlessly aggressive growth
The international food services group has made a bold foray into Spain
In its relentless drive to build scale, international food-services giant Bidcorp has added Spain to its line-up.
It brings to 35 the number of countries in which the R140bn annual revenue Bidcorp operates. They stretch across five continents.
Bidcorp’s move into Spain comes through its acquisition of a 90% stake in Guzmán Gastronomía & Cuttings (Guzmán) from private-equity firm Miura for an undisclosed sum. The remaining 10% is being retained by Guzmán management — led by CEO Jordi Franch, who has 16 years’ experience in the Spanish food sector.
Through its deal with Miura, Bidcorp has secured control of the national leader in the distribution of fresh products to hotels, restaurants and institutions. Specialising in fruit and vegetables, and value-added products such as salads, handcrafted breads and sauces, Guzmán distributes to more than 4,000 customers from its depots in seven Spanish cities.
Guzmán has expanded rapidly since it was acquired by Miura in 2011, with organic growth and a boost from seven acquisitions enabling it to lift sales revenue from €34m in 2011 to an expected €100m in its year to December 2017.
Bidcorp will undoubtedly want to go on aggressively building Guzmán’s scale.
There is a great deal of scope to do this in Spain’s highly fragmented food-services market which, according to research firm Gira Foodservice, generated revenue of €28.8bn in 2015.
Bidcorp has also indicated that it intends to expand Guzmán’s operations into "greater Iberia".
The acquisition of Guzmán fits in well with what Bidcorp CEO Bernard Berson terms its "three-part" growth strategy.
The first part of the strategy revolves around organic growth, with a focus on moving up the value chain to enhance margins. Backing organic growth is a steady stream of bolt-on acquisitions, of which eight (worth a combined R496m) were closed in Bidcorp’s interim six months to December.
The third part of Bidcorp’s growth strategy revolves around big, needle-moving acquisitions.
"They are usually made in new geographies," Berson said at an interim results presentation.
Bidcorp, already the world’s largest food-services group outside the US, has the financial muscle needed to pursue a very aggressive growth strategy. It ended its half year to December with R5.3bn cash on its balance sheet and net debt at only 7.5% of its R22.2bn equity. Cash flow is also powerful, coming in at R5.3bn after tax in the group’s year to June 2016.