Patak’s Deal Will Add Spice at ABF

WHILE Premier Foods has been gobbling up household names such as Quorn, Bird’s Custard and Mr Kipling, rival Associated British Foods has been fasting.

Its last big deal of note was bedtime drink Ovaltine in 2002. The conglomerate has been too busy strengthening its Silver Spoon sugar business for life in the new European Union regime by buying an African producer of cheap sugar.

And as the scrum outside its new flagship store on Oxford Street showed, expanding its successful discount fashion chain Primark has also been a major focus.

Only now has ABFwaded back into the larder with a hot deal to buy family owned curry firm Patak’s.

Analysts reckoned that ABF, maker of Kingsmill bread and Ryvita crackers, forked out around Pounds 125m. This sum could jump if Patak’s performs well under its ownership.

Patak’s makes Indian foods, including curry pastes, pickles and pappadums.

Employing 650 people, it produces 30m jars of sauces a year and over 1.6m ready meals.

Not only can the sauces be spotted up and down supermarket aisles, it is also supplies threequarters of Britain’s Indian restaurants.

ABF hopes the acquisition gives it a bigger footprint in the ‘world foods’ market code for groceries that are flying off the shelves faster than dry old bread and biscuits.

It plans to combine Patak’s chutneys with its Blue Dragon spicy sauces. This will give the division more might when negotiating with supermarket giants like Tesco and more scale to build up the business.

For Patak’s boss, Kirit Pathak, whose father founded the company in 1957, the deal allows him to speed up its expansion overseas while keeping the business in the hands of a company with a strong family heritage.

ABF is run by George Weston, whose family still owns 55pc of it.

Pathak said: ‘As a family we have taken it as far as we could.’ He said the business needed the muscle of ABF to take it across the globe.

He added: ‘This partnership will enhance the capacity of Patak’s to realise its full global potential.’ The chutney and curry maker already has a distribution relationship in more than 40 countries but 80pc of its sales still come from Britain.

ABF is keeping hold of Kirit and his wife Meena, who oversees product development. Kirit will be chairman of AB Foods’ new world foods division and Meena will be a director.

Finance director John Bason said the pair were part of the attraction of buying the company. He said: ‘They have done incredibly well building this UK business.We look forward to working with Kirit and Meena Pathak to build this business further.’ The sale to ABF takes Kirit Pathak from running a business with a Pounds 66m turnover to one with sales of between Pounds 150m and Pounds 200m. The couple met while Kirit was on a buying trip to India in 1976, and have proved to be a dream team.

Patak sales are growing at about 10pc a year and hit Pounds 66m in the year to September 30, 2006. Meena still approves every Patak’s recipe and helps develop 20 recipes every year.

ABF (up 61/2p at 932p) was lucky to get its hands on a family- owned business.

Aside from Warburton’s bread, Baxters soup and Jordan’s cereal, there are not many independent major food labels left.

Analysts gave the thumbs up to the deal. Darren Shirley at Shore Capital said: ‘Whilst not cheap, we believe Patak’s makes a sound acquisition for ABF. ‘We believe the addition of two strong entrepreneurial figures should be beneficial to both Blue Dragon and ABF.’

From hot samosas to Pounds 120m empire

THE Pathak family are an estimated Pounds 120m richer after selling their spices empire.

The exact sum paid by Associated British Foods was kept under wraps perhaps Kirit Pathak thought it tactful after the feud he had with his sisters over the ownership of the 40-year old company. They alleged they were cheated out of shares left to them by their father. The Kirit’s sisters walked away with an estimated Pounds 8m payout in October.

Patak’s was founded by Kirit’s father Laxmishanker Pathak in the late 1950s. He arrived in Britain from Kenya with Pounds 5 and a life insurance policy. He started selling samosas from his London kitchen.

(c) 2007 Daily Mail; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.