Patisserie Valerie saved in buyout backed by Irish private equity firm

https://www.theguardian.com/business/2019/feb/14/patisserie-valerie-saved-in-buyout-backed-by-irish-private-equity-firm-causeway-capital

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The Patisserie Valerie cafe chain has been saved from closure by a management buyout backed by an Irish private equity firm.

Almost 100 cafes will be rescued in the deal, backed by Causeway Capital, while another 21 sites under the Philpotts brand have been bought by AF Blakemore & Son, the family owned company which is the largest operator of Spar franchise outlets in the UK. The two deals will save about 2,000 jobs.

Patisserie Holdings – the listed parent company of the two chains – said they had been sold for £13m in total and there was also strong interest in the Baker & Spice chain.

Dublin-based Causeway specialises in investing in small and medium-sized companies and already owns BB Bakers + Baristas, which has 60 sites in the UK and Ireland.

Causeway Capital’s Matt Scaife said: “Patisserie Valerie is a heritage brand, much loved by its loyal customers. This investment should mark the end of a turbulent period for customers and suppliers alike. We are delighted to partner with the team and look forward to helping the business return to growth.”

The private equity firm said it wanted to help existing management to “refresh and renew” the Patisserie Valerie brand. The chief executive, Steve Francis, a turnaround specialist, joined the business in November after a £40m black hole was uncovered in its finances last October.

The rescue comes only days after Mike Ashley’s Sports Direct walked away from talks to buy the stricken cake chain.

Patisserie Valerie went into administration in January, blaming its financial difficulties on “very significant manipulation” of its balance sheet and “extensive” misstatement of its accounts. It suspended its finance chief Chris Marsh, who subsequently resigned after being arrested and bailed by police.

The Serious Fraud Office has said it is investigating an individual in relation to Patisserie Holdings, the cafe chain’s parent company, but has not commented further.

The company was valued at £450m before the black hole was discovered. Its collapse into administration wiped out shareholders, including the chairman, Luke Johnson.

Administrators at KPMG, who are running the company, have already closed 71 of Patisserie Valerie’s near 200 stores and concessions while they sought a buyer for the company. Dozens of bids were received, either for the whole company or some of its stores. Around 900 jobs have been lost.

Patisserie Valerie

Food & drink industry

Retail industry

Ireland

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