FDBusiness.com

B&M European Value Retail, the UK’s leading multi-price value retailer, has acquired Heron Food Group, a discount convenience retailer operating predominantly in the North of England with 251 stores, for an enterprise value of £152 million including debt. B&M is a fast-growing discount retailer, operating from over 500 high street and out of town stores across the UK, as well as under the JA Woll brand in Germany.

The acquisition of Heron will enable B&M to develop and roll out a complementary, proven and profitable discount convenience grocery brand. The customer profiles of Heron and B&M are similar and both formats are expanding successfully. Convenience is one of the areas of growth in grocery retailing today, although much of this growth to date has been based on premium pricing. The board of B&M believes that Heron’s expertise and attractive existing store portfolio, when supported by B&M’s proven sourcing, retailing and store roll-out capabilities, can bring an attractive new customer value proposition in an expanding sector of the grocery market.

For the year ended 31 December 2016 Heron delivered revenues of £274.4 million, EBITDA of £19.1 million and profit before tax of £8.6 million. Like-for-like revenue growth in the year was 3.0%. The business currently employs about.3,800 people and has approximately 1,200 SKUs, including ambient, frozen and chilled foods. Heron’s stores average 2,500 sq ft of retail space compared to B&M’s UK average of 19,000 sq ft.

Simon Arora, CEO of B&M comments: “B&M is already the UK’s leading general merchandise discount retailer, serving 4 million shoppers per week. The addition of a complementary, proven discount convenience grocery brand to our own structural growth story gives the combined business an even longer, exciting growth runway.”