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Uniq plc

Uniq plc

No. 1 Chalfont Park
Gerrards Cross, Buckinghamshire SL9 0UN
United Kingdom
Telephone: (44) 1753 276000
Fax: (44) 1753 276071
Web site: http://www.uniq.com

Public Company
Incorporated:
1959 as Unigate Limited
Employees: 7,600
Sales: £825.1 million ($1.44 billion) (2006)
Stock Exchanges: London
Ticker Symbol: UNIQ
NAIC: 311991 Perishable Prepared Food Manufacturing; 311712 Fresh and Frozen Seafood Processing; 311412 Frozen Specialty Food Manufacturing; 311511 Fluid Milk Manufacturing; 311999 All Other Miscellaneous Food Manufacturing

Uniq plc is a leading European producer of chilled convenience foods, supplying supermarkets and foodservice customers in the United Kingdom and continental Europe. The firm specializes principally in fresh chilled salads, sandwiches, ready-to-eat meals, fish, spreads, dips, dressings, desserts, and cottage cheese. In the domestic market, Uniq centers on producing private-label products for the leading food retailers. On the Continent, the company makes food products under such brands as Hamal, Johma, Lisner, Marie, Nadler, Paul Bocuse, and St Hubert. Uniq maintains manufacturing operations in Belgium, France, Germany, the Netherlands, Poland, Spain, and the United Kingdom. More than 60 percent of the company's revenues are derived outside its U.K. base.

Uniq's evolution to its early 21st-century incarnation has been rather remarkable. The company, in its various forms, and under a variety of names, went from selling liquor in the mid-19th century to selling milk and baby food in the early 20th century, to becoming by 1991 a conglomerate that marketed goods and services ranging from turkeys to transportation to Mexican food. Through a host of divestments and acquisitions from 1992 into the new century, Uniq shed its conglomerate status, emerging as a focused, though struggling, convenience food group.

FROM LIQUOR TO MILK

The history of Uniq dates back to 1882, when Charles Gates died and left his Guildford, Surrey, grocer's shop to two of his sons, Charles Arthur and Leonard. The store primarily sold liquor; it was the local agent for Gilbey's wines and spirits and also sold beer. The Gates brothers added tea and coffee to their father's shelves. Then in 1885, according to a story that has become a part of company legend, they were seized by a violent fit of pro-temperance sentiment, vowed never to make money off the liquor trade again, and poured their entire stock of alcoholic beverages into the gutters of High Street, Guildford.

This left them without a source of livelihood, but it occurred to them that the cellars underneath the shop, as well as the yards and stables in back, could be converted into a dairy. They bought a milk separator and started West Surrey Dairy, purchasing milk from local farmers, selling the skim back to them for feeding pigs, and selling the cream to the prosperous citizens of Guildford. In 1888 the company changed its name to West Surrey Central Dairy Company Limited. Three more Gates brothersWalter, William, and Alfredand three of their sons joined the family business about this time.

It did not take long for the business to become successful enough to justify expansion. West Surrey Central Dairy bought creameries in Somerset, Dorset, and even Ireland. Its brown jugs of cream soon became famous throughout England, though the level of artistry on the label left something to be desired. According to one historian of the British dairy industry, they showed "a cow looking uncomfortably through a somewhat untypical four-barred gate, rather as if its neck had got stuck between the bars."

West Surrey Central Dairy entered the baby food business in 1904 when Dr. Killick Millard, medical officer of health for Leicester, asked the company to supply powdered milk to help feed children of poor families. Four years later, its "Cow & Gate Pure English Dried Milk" was first marketed on a large scale. The dried milk became widely popular despite the prevailing belief that breast-feeding was essential to a baby's health. In 1924 the company developed a special export version of its powdered milk, for feeding babies in tropical climates, which became very popular. In fact, an Indian nobleman once placed a rush order for two cases. It turned out, however, that he wanted to feed the milk to his racehorses.

In 1929 the company renamed itself after its popular Cow & Gate product line, becoming Cow & Gate Limited. During the 1930s it worked with scientists to develop specialized formulas to cater to infants with special needs. It came out with Frailac, a milk food for premature infants; Allergiac for babies sensitive to certain constituents of cow's milk; and a cereal food designed to start babies on mixed feeding at an earlier age.

On the corporate side, the company had gone public in 1918 under the chairmanship of Bramwell Gates, the son of Walter Gates. In the 1920s and 1930s, Cow & Gate expanded by acquiring dairies and creameries. Economic conditions were by no means easy in postWorld War I Britain, and many of these acquisitions may have been salvages of struggling businesses. Cow & Gate began by purchasing Wallens Dairy Company of Kilburn in 1924 and added companies in Wales, Yorkshire, Lancashire, Cornwall, Devon, and Somerset over the next 15 years. In 1925 the company decided that its operations were large enough to justify setting up its own transportation subsidiary, and over the next seven decades that part of the company's operations (now known as Wincanton Logistics) would become one of the nation's largest transport concerns.

Political uncertainty in Europe in the early 1930s persuaded the Gates family to seek an overseas source of powdered milk as a way of safeguarding its export business. In 1933 Cow & Gate purchased a controlling interest in General Milk Products of Canada Limited. When World War II broke out in 1939, the British government banned all exports of food products, but Cow & Gate was able to keep its overseas markets supplied for the duration through its Canadian facilities.

MERGING WITH UNITED DAIRIES
IN 1959

Bramwell Gates retired in 1958 at the age of 83; he was replaced as chairman by Ernest Taylor. One of Taylor's first acts in office was to begin negotiating a merger with United Dairies, the nation's largest producer of dairy products. United was formed in 1917 when Wiltshire United Dairies, Metropolitan and Great Western Dairies, and Dairy Supply Company merged in an attempt to cope with distribution problems caused in the London market by the loss of men, vehicles, and horses to the war effort. In the late 1920s, United Dairies helped pioneer the sale of pasteurized milk in Britain. During the 1930s and into World War II it expanded into Scotland through the acquisition of dairies, and after the war spread its presence to Wales, Liverpool, Cheshire, Birmingham, and Sherbourne.

COMPANY PERSPECTIVES

We will unlock the potential of Uniq through: a passion for growth; customer intimacy and profitable differentiated innovation; world class manufacturing with integrated supply chains; high performing people and culture.

The merger between Cow & Gate and United Dairies was consummated in 1959. The new company was reincorporated as Unigate Limited. Integration was not easy, however, and internal politics and rivalry between factions adhering to old-company loyalties continued to plague Unigate for years. In 1963 Unigate acquired Midland Counties Dairies and began buying up small grocery stores and restaurants soon thereafter, but otherwise the company moved slowly in the early 1960s as it tried to digest the merger.

TRANSFORMING INTO
CONGLOMERATE

As milk consumption leveled off in the 1960s and began to decline as the decade ended, Unigate responded by increasing its nondairy businesses and its nonmilk product lines. In 1970 it announced plans to expand its retail activities, which included Kibby's supermarkets, Quids-In clothing shops, Uni-Wash laundrettes, and even some Kentucky Fried Chicken franchises. In 1973 it acquired Scot Bowyers, a meat-processing company. In 1975 it purchased Frigo, an American maker of Italian cheeses, and it acquired another U.S. specialty cheesemaker, Gardenia, in 1978.

Even so, Unigate's financial performance was sluggish through the early and mid-1970s and it continued to be bothered by political infighting, a sign that the merger was still not fully digested. When John Clement became chief executive and chairman in 1977, he immediately set about knocking heads in the name of company unity. Over the next five years, Unigate lost a number of senior executives and Clement, a career dairyman, gained a reputation for autocratic rule. Yet he also put the company on solid financial footing and accelerated the process of diversifying its business.

One of Clement's first major acts as chairman was important in this regard. In 1979 Unigate parted with three-quarters of its manufacturing capacity when it sold 16 of its creameries to the Milk Marketing Board for £87 million. The sale lessened its presence in its traditional mainstay, but raised cash for acquisitions and paying off debt. In a similar vein, Unigate in 1981 sold Cow & Gate baby food to Nutricia, gaining a 29 percent stake in the Dutch firm. That same year, Unigate acquired Giltspur, a moving company; Turners Turkeys; and Casa Bonita, an American restaurant chain specializing in Mexican food. In 1984 it added another poultry processor, J.P. Wood. In 1985 it acquired Arlington Motor Holdings, followed by Colchester Car Auctions the next year, and added them both to the Wincanton Group. Also in 1986, it added the U.S. restaurant company Prufrock, which specialized in southern-style food through the Black-Eyed Pea chain.

In the mid- and late 1980s, however, some of these diversification moves were dismissed after they proved less than successful. In 1984 Clipper Seafoods, a struggling fish-products business, was sold. Scot Bowyers was sold to Northern Foods in 1985. In 1987 Unigate divested several small engineering businesses that had been acquired with Giltspur. To complicate matters further, Unigate also began reinvesting in its milk business in 1987, acquiring the Middlesex dairy H.A. Job for £26 million. As of that year, it was still the U.K.'s leading milk supplier, despite relying on milk for less than one-third of its business.

KEY DATES

1882:
Charles Arthur and Leonard Gates take over their father's Guildford, Surrey, liquor store.
1885:
The Gates brothers abandon the liquor trade and convert their business into a dairy called West Surrey Dairy.
1888:
Company changes its name to West Surrey Central Dairy Company Limited.
1904:
West Surrey Central enters the baby food business, producing a powdered milk that was eventually dubbed Cow & Gate Pure English Dried Milk.
1917:
Wiltshire United Dairies, Metropolitan and Great Western Dairies, and Dairy Supply Company merge to form United Dairies.
1918:
West Surrey Central goes public.
1924:
West Surrey Central sets up its own transportation subsidiary, which will evolve into Wincanton Logistics.
1929:
West Surrey Central is renamed Cow & Gate Limited.
1959:
Cow & Gate and United Dairies merge to form Unigate Limited.
1977:
New Chief Executive John Clement accelerates the company's diversification.
1979:
Unigate divests 16 of its creameries.
1981:
Cow & Gate baby food is sold to Nutricia.
1990:
Under Chief Executive Ross Buckland, Uni-gate begins process of deconglomerizing itself, returning to a focus on European food and distribution.
1995:
Company makes first move into the continental European food sector.
1999:
Unigate acquires Terranova Foods plc, Marie Surgelés France, and Générale Traiteur S.A.
2000:
Company divests its milk and cheese business; Unigate is renamed Uniq plc.
2001:
Logistics arm Wincanton is demerged to shareholders and pigmeat business Malton Foods is divested, leaving Uniq fully focused on convenience foods.

The diversification of Unigate paid off in the early years of the 1980s, as the company's financial performance improved dramatically during the decade, with pretax profits more than doubling between 1981 and 1986, and its debt load steadily declining. However, profits stagnated from 1987 through the end of the decade, and Unigate's situation worsened in 1990 when recession hit. Clement was replaced as chief executive in October 1990 by Ross Buckland, who had headed European operations for the Kellogg Company, the U.S. cereal giant. In December 1991 Clement was replaced as chairman by Brian Kellett.

NARROWING FOCUS TO
EUROPEAN FOOD AND
DISTRIBUTION

With Clement out of the picture, Buckland proceeded to deconglomerize Unigate, returning to a focus on food and distribution in the United Kingdom and Europe. The company raised more than £700 million via divestments through 1997. Disposals in 1992 included poultry processor J.P. Wood, sold to Hillsdown Holdings plc in February for £29.6 million; Giltspur International, sold in August to P&O Exhibition Services; and the Frigo and Gardenia cheese brands, sold in September to Stella Foods. In 1993 Unigate sold Arlington Motors to Lex Services PLC for £49.5 million in July and in September sold two businesses to Dalgety PLC for £30.4 million: Morton Foods, a supplier of batter and crumb coatings to the food industry, and W.J. Oldacre, which managed eight animal feed mills. In August 1994 Turners Turkeys was sold to Bernard Matthews P.L.C. for £18 million. During 1995 Unigate exited from the baby food business with the sale of its 29 percent stake in Nutricia, which raised £332 million; from the auto sector, through the $62 million management-led buyout of National Car Auctions; and from the exhibitions business with the sale of Giltspur Inc. to the Dial Corp. for £40 million. The following year Unigate disposed of its restaurant operations by selling Black-Eyed Pea to DenAmerica Corporation (the largest franchisee of Denny's restaurants) for £42 million ($65 million) and Casa Bonita to CKE Restaurants, Inc. for £27.1 million ($42 million).

During the same period Unigate spent more than £400 million beefing up its foods, dairy, and logistics businesses, the three core units that would remain with the company by the end of the decade. The company made its first move into the continental European food sector in 1995, when it purchased two French firms: Prodipal, a maker of yogurts and desserts, and Vedial, a maker of spreads. In September 1996 Unigate paid £77.3 million for the U.K. and Italian margarine and spreads business of Kraft Foods International. Meantime, in 1994 Kellett died; Buckland served as acting chairman until March 1995, when Ian Martin, a former executive with Grand Metropolitan PLC, took over as chairman.

Unigate's restructuring led to steady increases in pretax profits from fiscal years 1994 through 1998. It also left it in a strong position from which to make acquisitions. In May 1998 the company made a £1.59 billion bid to acquire Hillsdown Holdings, a holding company with interests in food, housebuilding, and furniture, but the proposal collapsed acrimoniously. In February 1999 Unigate acquired Fisher Quality Foods Limited, a leading U.K. supplier of sauces, dressings, and marinades, from the Albert Fisher Group PLC for £43 million. Meanwhile, Hillsdown had proceeded with a breakup plan, whereby it spun off its chilled convenience food subsidiary as Terranova Foods plc. In March 1999 Unigate initiated a hostile £228.5 million takeover bid of Terranova, which was the part of Hills-down it had wanted in the first place. After Unigate raised its bid to £274 million ($439 million), Terranova's directors recommended that the bid be accepted, and the deal closed in May. Hard on the heels of this transaction, Unigate bought Groupe Danone's frozen and chilled ready-to-serve meal units, Marie Surgelés France and Générale Traiteur S.A., for £165 million ($265 million).

CONCENTRATING ON
CONVENIENCE FOODS AS UNIQ

In 2000 and 2001 the company completed its transformation into a focused, and much smaller, producer of chilled convenience foods. Unigate made a dramatic break with its past in July 2000 when it sold its milk and cheese business to Dairy Crest Group plc for £220 million. Dairy Crest retained the right to use the Unigate name for the divested business, which prompted a name change. In October 2000 Unigate changed its name to Uniq plc. The new moniker combined "Uni," which provided a link to the company's past, with a "q," which was meant to evoke the firm's emphasis on quality. In January 2001 Buckland stepped down as chief executive, ending a hectic and deals-filled decade-plus at the helm. Succeeding him was Terry Stannard, who had been the head of the firm's convenience food business, coming onboard via the acquisition of Terranova.

In May 2001 Wincanton, the logistics arm, was de-merged to shareholders. In September, Stannard resigned suddenly after Uniq issued a warning that profits for the current year were likely to be "substantially below" expectations. Taking over on an interim basis was Nigel Stapleton, a former co-chief executive of Reed Elsevier plc who had replaced Martin as nonexecutive chairman just a few months earlier. Stapleton managed the disposal of Uniq's final noncore operation. In October 2001 Uniq sold Malton Foods, its loss-making pigmeat business, to Grampian Country Foods Group, for £31.5 million. Uniq was solely focused on chilled convenience foods.

Uniq hired a new chief executive in February 2002, Bill Ronald, former managing director of Mars Confectionery. Following a strategic review, Ronald announced that Uniq planned to sell its U.K. branded spreads and yogurt businesses, both of which were struggling. The St. Ivel Shape yogurt unit was sold to Groupe Danone for £32.5 million, while St. Ivel Spreads was sold to Dairy Crest Group for £86.5 million. Uniq also sold U.K.-based sauce maker Uniqsauces to McCormick & Company, Incorporated for £12.2 million. Proceeds from the disposals enabled Uniq to pay down debt, but they also entailed a further shrinkage in the firm's revenues. Turnover amounted to less than £1 billion in the fiscal year ending in March 2003. By comparison, in fiscal 2000, the last year in which the company was called Unigate, turnover was three times higher than the 2003 total.

Uniq in its slimmed-down, focused form proved also to be much less profitable than the Unigate of the late 1990s. In fact, between 2001 and 2006, the company operated in the black only in 2003, when it reported a modest net profit of £24.9 million ($39.3 million). Various special items and restructuring charges ate away at the bottom line throughout this period. In its home market following the 2002 divestments, Uniq was in the vulnerable position of concentrating solely on providing private-label products to retailers. The company was supplying tens of millions of sandwiches each year to Marks and Spencer p.l.c., but was increasingly being squeezed by the buying power of the giant U.K. food retailers. Under this pressure, Uniq closed two of its four U.K. manufacturing plants during 2005 as part of a cost-cutting initiative. The weakened company also had to endure a period of uncertainty as U.K. and U.S. private equity firms (Duke Street Capital and CapVest Equity Partners, respectively) made takeover offers between October 2004 and March 2005. Uniq ultimately rejected the bids.

In March 2005, in the immediate wake of the rejected offers, Ronald was forced out by the board of directors, which had decided to change the company's direction. Hired to oversee the strategy shift as chief executive was Geoff Eaton, who came onboard in August 2005. Eaton was a chartered accountant with extensive experience with restructuring at such firms as Ranks Hovis McDougall Limited. Abandoning its plans to become a pan-European food producer, Uniq under Eaton's leadership elected to focus on a smaller number of convenience food businesses with the greatest potential for growth and profitability. In the United Kingdom, each of the company's operating sites were transformed into standalone business units with their own managing directors and senior management teams. These included three units producing desserts and cottage cheeseEvercreech, Paignton, and Minsterley, the latter having been acquired from Northern Foods plc in May 2004the Food on the Move unit specializing in sandwiches and dips, Smedleys prepared salads, and Pinneys fish and ready-to-eat meals. On the Continent, the company's northern European operations were also decentralized, and in June 2006 Uniq announced plans to sell its French spreads business and its Belgian ready-to-eat salad unit. Proceeds were to be used to cut borrowing and to address a large deficit in the firm's pension fund, a legacy from Uniq's days as the much larger Unigate. As Uniq's latest attempt to turn its fortunes around progressed, Stapleton was confident enough of a recovery to announce his intentions to stand down as chairman at the end of 2006. Selected to succeed him was Ross Warburton, who had extensive experience in the U.K. food industry.

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

Uniq (Holdings) Limited; Uniq Prepared Foods Limited; Uniq Belgium NV; Marie Frais SAS (France); Marie Surgelés SAS (France); St Hubert SAS (France); Uniq Deutschland GmbH (Germany); Uniq Convenience Foods Nederland BV (Netherlands); Uniq Lisner Sp.zo.o (Poland); Andros Food SA (Spain).

PRINCIPAL DIVISIONS

Northern Europe; Southern Europe; United Kingdom.

PRINCIPAL COMPETITORS

Northern Foods plc; Greencore Group plc; Bakkavör Group hf.; Perkins Foods Holdings Ltd.

FURTHER READING

Beddall, Clive, "Why Malton Is Now the Number One," Grocer, March 2, 1996, p. 16.

Benoit, Bertrand, "Unigate to Buy Danone Units for $230m," Financial Times, June 1, 1999, p. 22.

Bilefsky, Dan, and Alison Smith, "Unigate Makes £228m Bid for Terranova," Financial Times, March 17, 1999, p. 22.

Blackwell, David, "Dalgety Expands via Purchase of Two Unigate Subsidiaries," Financial Times, September 4, 1993, p. 8.

, "Unigate Agrees to Buy Albert Fisher Division," Financial Times, January 20, 1999, p. 23.

Blackwell, David, and Antonia Sharpe, "Unigate Sells Nutricia Stake for Fl 745m," Financial Times, December 8, 1995, p. 20.

Bream, Rebecca, and Maggie Urry, "Uniq's Chief Goes and Strategy Changed," Financial Times, March 16, 2005, p. 25.

Carlino, Bill, "CKE Acquires Taco Bueno, Makes Push into Texas, Okla.," Nation's Restaurant News, September 9, 1996, pp. 1 +.

Cull, Christian, "Full Day's Knight," Grocer, October 25, 1997, pp. 3839.

Edgecliffe-Johnson, Andrew, "Unigate, Hillsdown Trade Recriminations," Financial Times, May 30, 1998, p. 19.

"Europe Is the Favoured Route for Unigate," Grocer, November 23, 1996, p. 12.

"Leaner Unigate Stays in Shape," Grocer, February 26, 2000, p. 10.

Maitland, Alison, "Unigate Chief Warns of Change," Financial Times, November 18, 1997, p. 26.

"Martin Takes Over Unigate Chair," Financial Times, March 10, 1995, p. 18.

Odell, Mark, "Uniq Sees Disposals Helping Recovery," Financial Times, June 7, 2006, p. 24.

Oram, Roderick, "Unigate Makes £65.1m Move into Continental Dairy Market," Financial Times, January 10, 1995, p. 19.

, "Unigate to Buy Kraft UK and Italian Margarines for £77m," Financial Times, July 9, 1996, p. 17.

, "Unigate to Cut 1,500 Dairy Staff As Milk Costs Soar," Financial Times, June 13, 1995, pp. 1, 22.

Ruggless, Ron, "DenAmerica Agrees to Acquire Black-Eyed Pea," Nation's Restaurant News, June 17, 1996, pp. 3 +.

Saigol, Lina, and Maggie Urry, "Unigate Takes Uniq Route to Follow Trend," Financial Times, July 27, 2000, p. 24.

Smith, Alison, "Uniq Confirms Demerger of Wincanton," Financial Times, November 14, 2000, p. 28.

"Unigate," Restaurant Business, August 10, 1989, pp. 112 +.

"Unigate Foods Hit Hard by Recession," Super Marketing, November 27, 1992, p. 17.

"Unigate Is Loaded with Cash but What Will It Buy?" Grocer, January 6, 1996, p. 8.

"Uniq Goes on Cost Cutting Drive," Grocer, November 10, 2001, p. 10.

Urry, Maggie, "Corporate Rebuilder Quits Uniq for Pastures Old," Financial Times, January 20, 2001, p. 16.

, "Eaton Becomes Chief Executive at Uniq," Financial Times, July 8, 2005, p. 24.

, "Unigate's Terranova Bid Nears Success," Financial Times, April 29, 1999, p. 29.

Watson, Elaine, "Flying out of Trouble?" Grocer, June 22, 2002, pp. 3031.

Willman, John, "Unigate Still Keen on Acquisitions," Financial Times, June 9, 1998, p. 22.

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