Two of the country's leading meat processors, Dalehead Foods Ltd and Roach Foods Ltd, have joined forces today by forming a new holding company, Flagship Foods Ltd. Whilst the two businesses will continue to trade separately, Flagship Foods, with combined sales of £270 million, will become the second largest supplier of pork, bacon and cooked meats to UK supermarkets, a market worth £3 billion annually. 

The amalgamation will be of significant importance to this sector, to which both Dalehead and Roach Foods will continue to supply the majority of their products. Individually, these companies have been market leaders on issues of animal welfare, food safety, product consistency and traceability, as well as customer and consumer satisfaction. Both Dalehead and Roach Foods believe these are particularly important factors in a climate of retail supply chain rationalisation and an increasing demand for full traceability of foods from farm to plate.

The merger of these two companies, with their complementary skills and product ranges, offers synergies which in the words of Tony Ambler, Flagship Foods' Chairman, "are too great to ignore" for present and potential customers and themselves. "The benefits for customers in terms of new product development, operational efficiencies and category management will assure Dalehead and Roach Foods' customers of the Group's future value as preferred suppliers and category managers", Tony Ambler continues.

Anvil Partners, financial advisers to Roach Foods and Flagship Foods, structured the £150 million transaction and arranged equity and debt finance, which is being used primarily to support the Group's capital expenditure programme and to enable minority shareholders in Dalehead to exit. Equity finance was provided by HSBC Private Equity in return for a minority stake and debt by The Royal Bank of Scotland as Lead Arranger and Rabobank International as Co-Arranger. Andy Thesen, Director of HSBC Private Equity, joins the Flagship Foods Board as non-executive director. Arthur Andersen's Cambridge Corporate Finance Group advised Dalehead.

The financial strength of the new Group will ensure increased investment in plant and personnel to keep the Group at the leading edge of food processing. This in turn will lead to a need for an increasing amount of home produced meat at Dalehead's operations which is good news for British pig farmers. Continuing relations with existing suppliers is crucial and communication through partnership will remain the priority.

For its part, Roach Foods will seek to strengthen their existing relationships with both domestic and international suppliers. "This merger is to ensure capitalisation of mutual core competence and all Roach Foods' suppliers will benefit from the move," says Graham Roach, Roach Foods' Chairman and Group Chief Executive of Flagship Foods. "It is not intended to alter any existing relationships with our valued supply base. Indeed, as we develop and strengthen, so will our collaboration with those we already value and trust."

Tony Ambler will be Chairman of Flagship Foods and Dalehead. Graham Roach is Flagship Foods' Chief Executive whilst remaining Roach Foods' Chairman. John Hughes, Dalehead's Group Operations Director, becomes Dalehead Managing Director. Mark Forbes, Roach Foods' Managing Director, will continue in this role. Both he and John Hughes become Directors of Flagship Foods.

Tony Ambler and Graham Roach will have a controlling stake in the new Group and the Board of Flagship Foods are keen to assure their 2,400 employees that this merger will further secure present and future employment for al involved.

Two of the most respected companies in the business will now combine their experience and skills to work confidently together for the future. "We have admired each other's achievements in the past and our shared philosophy and confidence in the future makes this an exciting move for all concerned," states Flagship Foods Chairman, Tony Ambler.