A company tagged as being acquisitive immediately conjures up images of
energetic, aggressive businessman with an insatiable lust for buying up rivals
and dominating the market.
A glance at the track record of
Glisten, the AIM-listed
snack food group, suggests that its board members fit the profile exactly. Since
listing on AIM in 2002 Glisten’s share price has climbed from 80p to more than
380p, the company has made four major acquisitions and its turnover has
If ever there was a business with a ruthless streak, surely Glisten would be
it? Rob Davies, Glisten’s finance director, however disagrees.
Davies has worked in the food industry for 24 years and has been involved in
acquisitions, disposals and business reorganisations for equally long, yet he is
anything but the stereotypical deal junkie.
He is calm and softly spoken, and when he discusses his philosophy towards
acquisitions and people management it quickly becomes clear that he is not
interested in swallowing up businesses, stripping them down and squeezing them
until they crack. Instead of culling management teams and laying-off staff,
Davies and Glisten take a far more gentle approach to bedding down new
‘In my career I have acquired and being acquired. I have been on both sides
of the fence and I think the key is not changing anything. There are a lot of
people that may well argue with me, but being acquired has a very disruptive
impact on people. It creates uncertainty and it can destroy people’s confidence
in their own ability. Always treat people as you would expect to be treated
yourself and listen to what people have to tell you.
‘What we have tried to do is leave the way people report unchanged. For the
first six to twelve months we will pick up information as a company presents it
and consolidate it into our own format, and then gradually change things
thereafter. That way it becomes seamless and then it is not threatening,’ Da
This careful approach to integrating a new business is also evident in the
way Glisten approaches potential acquisitions. The company’s strategy is based
on buying a business with products that can be cross-sold to the customers of
other businesses within the Glisten portfolio.
‘We have a set of criteria for acquiring a business, which means that
sometimes other bidders such as private equity firms will pay more than us, but
at the end of the day we are all about enhancing shareholder value, and if a
deal doesn’t work for a business it is not for us,’ says Davies.
A classic example of this strategy is Glisten’s eventual purchase of cereal
bar producer Halo. Davies said the business had been considering Halo for
several years having backed out of a purchase three times before eventually
closing a deal at the end of 2004.
‘We had been looking at Halo for a number of years prior to acquisition, and
nearly bought on three occasions when issues around its results took us back.
The company was in a fast growing sector, but it tended to put in the following
year’s overhead before it had delivered the following year’s sales growth. By
the time we did buy the business we had a very good idea about what Halo was
about,’ he says.
When Glisten bought Halo it also acquired a subsidiary of its new purchase
called Nimbus, an industrial food services company. The business had a turnover
of £4m, but had never made a profit. Three months after Glisten took over
operations the company went into profit.
‘A business can live without profit but it can’t live without cash, unless
you produce some profit the cash will shortly run out,’ Davies says.
With this mantra in mind Davies says he did ‘the obvious things’ at Nimbus,
such as tightening costs and using its buying power. The most important step,
however, was reinvigorating Nimbus’s flagging management team.
‘The Nimbus management team had always worked under Halo, so they were almost
second class citizens. We told them that they were important and gave them the
confidence to develop the business. Nimbus has reported profits for the last 20
months. It has been a real star performer,’ Davies says. He attributes the
successful turnaround of Nimbus to concentrating on the fundamentals of business
management, applying common sense and listening to what people had to say.
This philosophy of developing management talent and giving people
responsibility is something that Davies prioritises, and his finance team is
proof of this.
He has two divisional finance directors who report to him and he leaves them
to run their own teams. He is not interested in a single finance team, and
prefers to give people responsibility and let them learn and develop.
‘Our aim is to create the future management of the business. We want to pull
people into our company, and because we are acquisitive we hope to provide
opportunities for people to extend themselves. All the businesses run themselves
autonomously and the PLC sits on top. We want to keep our businesses small and
entrepreneurial, so that they are flexible and can react to change,’ Davies
Glisten’s entrepreneurial spirit is what attracted Davies and his chief
executive Paul Simmonds to AIM, where the company has enjoyed a successful
period since listing. The company has raised further funds since going public
and developed its shareholder base.
‘We have enjoyed our journey on AIM so far. We have raised money on a couple
of occasions for acquisitions. When we floated, we started with 104 shareholders
and we have grown steadily to the heady number of 720 shareholders. That
reflects the journey that we have been on,’ Davies says.
The aim Challenge
It hasn’t all been easy going on the junior market though. Since Glisten
listed in 2002, a further 886 companies have joined the exchange, which has made
it difficult to stand out from the crowd.
Davies says that pushing its message into the market was particularly
challenging for Glisten because of its relatively complicated business plan.
‘I think we have had some difficulty with the message. Some of competitors
have simpler messages, and it has taken time for people to understand that. We
don’t want to be number one in confectionery or number two in chocolate. We want
to have a presence in a number of adjacent market. We want to have interesting
positions in growing parts of the food sector. It has taken a long time to get
that message out there, but it is becoming entrenched in our investor base,’
The next major communication challenge that Davies faces is the introduction
of IFRS. AIM companies have managed to avoid IFRS so far, but from the beginning
of 2007 the standards will become mandatory on the junior market.
As it is an acquisitive company, Glisten’s numbers will look quite different
when reported under IFRS, but Davies is not overly concerned because the company
is one of the last reporters and so will have many precedents to follow, or
‘We will be one of the last AIM companies to adopt IFRS because of our year
end. It’s good because we have seen how the main list has managed IFRS and we
will be able to see how other AIM companies deal with it,’ Davies says.
BREAKING INTO NEW MARKETS:
The recent focus on healthy eating could be seen as a blow for a company that
classifies itself as a snack food group and has boiled sweets and sugar-based
confectionery in its product line.
For the FD, that healthy foods have become fashionable is not something that
overly worries him.
‘We have always wanted to have a presence in a range of different food
markets, and I am very happy with the mix of business that we have,’ Davies
When Glisten listed on AIM in 2002 the company was exclusively focused on
chocolate and sugar-based confectionery, but Davies says the strategy has always
been to diversify Glisten’s markets and build a presence in the ‘healthy food’
The company’s acquisition programme demonstrates this. The company acquired
Halo Foods, the cereal and health bar company, at the end of 2004 and a year
later bought well-known organic brand Lyme Regis, which also makes cereal and
fruit bars. Almost half of Glisten’s business is now made up by foods in the
healthy snacking, slimming, nutrition and organic markets.
‘We have always tried to place the business at the centre of the changing and
growing side food. The organic, healthy snacking area is something we had
identified earlier,’ Davies says.
This is not to say, however, that the sweets and confectionery side of
Glisten’s business is no longer important to the company. Confectionery still
makes up 22%ofGlisten’s portfolio and Davies stresses holding a diverse range of
products is the key to his strategy.
‘We are happy with a spread of products because there is an opportunity to
develop the products into adjacent sectors. We wanted to be a one-stop shop for
our customers. What we are trying to do is sell more of what we have to more of
our customers,’ he says.
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