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PE Owners Combine Findus, Young's to Create European Seafood Giant

Effective February 1, the Findus and Young's frozen and chilled food operations will be merged into a unified operation by their private equity owner CapVest, operating under the FoodVest name.

Young's has a leading position in the UK fresh, frozen and chilled seafood markets, supplying some 40% of all seafood consumed in the UK, with Findus (formerly Nestlé's frozen foods brand) the market leader in Scandinavia. The combined annual turnover of the two companies is some 1.1 billion Euro.

According to the company press announcement, Findus operations will remain essentially unchanged while, in the UK, Young's Seafood will focus on branded frozen and chilled seafood products with The Seafood Company focusing on retailer own label chilled products. Young's also has a foodservice subsidiary supplying restaurants and caterers.

FoodVest claims that the move is driven by economic reasons but has nothing to do with "cost-cutting". The official announcement stressed that there would be no job loses as a result of the reorganization. The essential point is that both Findus and Young's have already implemented substantial job restructurings as a result of earlier private equity-driven reorganizations.

Employment at Findus was systematically and brutally reduced following its acquisition by Swedish private equity fund EQT in 2000. At the time of purchase the Findus Group consisted of 14 plants throughout Europe - including 2 in Sweden - with 3,400 employees. Today there are 6 plants - only one left in Sweden - with 2,900 workers. Research staff at the company's Swedish headquarters - crucial to product innovation - was reduced from 200 to 40. CapVest acquired it for an undisclosed sum, on undisclosed terms, in a secondary buyout in 2006.

CapVest also acquired Young's in a secondary buyout, from UK private equity firm LGV in 2002. LGV combined Young's with Bluecrest, picked up from wholesaler Booker PLC, to create Young's Bluecrest. Prior to being acquired by private equity, Young's had undergone a series of changes of ownership, including a period of ownership by United Biscuits (itself acquired by private equity firms Blackstone and PAI in 2006). CapVest built Young's through a series of acquisitions, but failed in a bid for its chief frozen fish rival Unilever's Birds Eye/Igloo, which was captured by Permira.

Recent restructuring at Young's has involved the January, 2007 closure of a factory in Hull which eliminated 200 jobs, following on the closure of another Hull facility one year earlier. Between the two Hull closures, Young's eliminated 120 jobs at its scampi processing facility in by shipping the scampi for hand shelling in Thailand, where Findus operates shrimp shelling facilities, and then closed the factory completely, with more job losses. From Thailand the scampi are shipped back to the UK for further processing, a roundtrip journey of 17,000 miles (30,000 km). The T&G regional industrial organizer at the time called the decision "global capitalism gone absolutely mad." In a convoluted defense, Young's declared that "We are an international business committed to high standards of practices and wherever possible we will select seafood suppliers that are able to catch, farm and undertake primary processing locally round the world. In this particular case, I believe the decision to ship to Thailand will produce long-term benefits for one of the UK's best- managed fisheries - a benefit that in this case outweighs the environmental impact of transporting that product by sea."

The announcement that CapVest would be combining its two seafood operations reiterated that "It intends to be a world leader in responsible seafood sourcing and good environmental practice." While piling on food miles by shipping shrimp around the globe and back, the same investors who back CapVest can also trade in carbon emissions…

On January 17, CapVest acquired a controlling stake in Dutch-based coffee roaster Drie Mollen, one of Europe's largest coffee roasters and a specialist in private label production.