When it was announced in January that Autobar Group had sold King UK few people in the industry were surprised as it had been known it was up for sale, but what was unexpected was the identity of the purchaser. Most people had expected the non food specialist would follow the trend for consolidation in the industry by becoming part of a big group like Brakes, Bunzl or 3663, but instead it was bought by Casper which had been in existence for six months and owned one other Features > Business, the pound;12m turnover Industrial Supplies (Peterborough).
Christoph Sander, managing director of Casper, admits that when he and his partners founded the company last June, they had not anticipated that King might be a takeover target for them. Sander set up the company with two people he knew from his time working as managing director of Bunzl Europe and Australasia, Peter Ward and David Wallwork, who has become managing director of King.
They intended to use their expertise in non food procurement to provide a range consultancy services to clients, but also bought Industrial Supplies, a supplier of cleaning and hygiene products from depots in Nottingham, Peterborough, Ipswich and Enfield. Industrial Supplies is a founder member of the Nationwide buying group, an independent group of family-owned cleaning and hygiene distributors in the UK with a combined turnover of around pound;90m.
In a move to exploit the founders’ expertise in procurement from China and the Far East, a vital source for the non food market, Casper also set up an office in Hong Kong to source products for their own business and on behalf of others.
When the Casper team became aware of the possibility to buy King, Sander says they were aware of the opportunity it presented, even though it had been in decline. The company had recently lost a contract with Compass, which had accounted for about 30% of its turnover, cutting it to about pound;85m, and had a lot of surplus space at its 11 depots. King has nationwide coverage with depots across England, and in Scotland and Wales, and Sander says it was obvious that it could maintain the same level of coverage with fewer depots.
After the deal was signed in early January the Casper team immediately visited all 11 depots to meet the staff and discuss their future plans. Sander says that although they made it clear there would need to be depot closures and redundancies, they received a positive response from the workforce. He says: “We were very open about it and they have been incredibly positive. They have found our approach very refreshing and they would rather know what’s going to happen.”
After visiting the depots Casper went out to meet customers and Sander says they too were very positive. He says customers want to have a choice of suppliers and they were worried that, had one of the big players taken over King, that choice would have been diminished. They were also reassured by Casper’s long-term growth plans for the business and he says that confidence encouraged suppliers to increase their business with King.
Although it is certain depots will be closed, Sander says it is too early to confirm how many or which ones, and that when the decision is taken staff will be the first to know. He adds: “By the summer we will be able to say ‘these are the steps we are going to take’, and we will be very open about that both to employees and customers.”
What is certain is that Casper will be aiming to increase the amount of business and to improve margins. Sander says: “We’ve only been going eight weeks and we’ve secured two new contracts worth several million pounds.” One is still confidential, but the other, with Elior, is worth pound;15m over three years. Costs will be taken out of the business through the depot closures and redundancies, but Casper will also be looking to use their expertise in procurement and their Hong Kong office to reduce costs in that area too.
Sander says King will maintain its reputation for one of the most comprehensive ranges of products in the Features > Business, but it will be looking to focus on preferred suppliers. A significant proportion of King’s customers place their orders electronically and the team from Casper will also be looking to refresh King’s system and develop it further.
Sander says: “The issue with King going forward is refocusing, developing new Features > Business, reducing the cost base and getting the business back to where it should be, which is the market leader supplying the licensed trade, and the hotel, catering and leisure sectors.”