Lacking buyer, ISI reverses course and will retain UK assets

On 30 December, ISI said it once again signed a letter of intent to sell a majority share of its U.K. subsidiary to an unnamed buyer, with the goal of completing the transaction by 17 February, 2023. But that deal also fell apart, the company said on 20 January.

“During December 2022, two LOI’s were signed with prospective buyers to sell the business, but neither negotiation turned out to be successful,” it said. “After careful considerations, the board of Iceland Seafood has decided to put the sale process on hold and continue to operate the U.K. subsidiary.”

ISI purchased the former Five Star Foods and 2 Sisters Food Group production facility in Grimsby, U.K. in 2020, and consolidated its operations from an older plant it operated in Bradford, called Iceland Seafood Barraclough, and a separate Grimsby-based plant formerly operated as Iceland Seafood Havelock. ISI invested GBP 6 million (USD 7.3 million, EUR 7 million) to upgrade the plant, including adding processing and cold storage capacity. But after losing around GBP 12 million (USD 14.5 million, EUR 13.4 million) operating the plant, according to Business Live, the company said it was interested in selling the business.

“In an industry where consolidation is needed … It is however the conclusion of the board of directors that the proposals received didn’t reflect the value of the company, as external conditions for the industry have been challenging,” it said. “Recently, Iceland Seafood U.K. has made significant progress with its strategic partners recovering unprecedented inflationary cost and adding a significant new business. Therefore, the company foresees better results, driven by the above, in addition to returns on investments in equipment, that will increase its ability to grow and reduce unit costs. Markets are stabilizing, after the high volatility and constant upward cost pressure experienced throughout last year, which severely impacted the results of IS UK in 2022. IS UK will continue to cooperate closely with its loyal customers and suppliers.”

ISI changed management of its U.K. management operations but struggled with a U.K. market in turmoil due to inflation and knock-off effects of the Covid-19 crisis. It also suffered from a fire that broke out 25 August along a coating line at the Grimsby plant.

ISI said it will continue to review its U.K. business “on an ongoing basis” and “remains interested to support further consolidation of the UK business at the right time and terms.”

ISI said it plans on publishing its year-end financials on 22 February and that the company’s management will discuss the results in a presentation after the Nasdaq Iceland exchange closes trading.

Photo courtesy of PPH Commercial