Bunzl set for more buyouts

RETAIL packaging behemoth Bunzl is eyeing a large acquisition in the US, analysts believe, after it raised pre-tax profits six per cent to £100m and increased its dividend.

The supplier of take-away boxes and hard hats said it had a “promising” pipeline of ideas as it delivered a robust set of interim results. Bunzl has bought eight businesses since the start of the year and announced the purchase of California-based vegetable packaging producer Cool-Pak and Brazil’s AM Comércio Representação e Serviços yesterday.

Chief executive Michael Roney told City A.M. more deals would follow, adding: “There are discussions going on with potential targets – we deal in fragmented markets and there’s a lot of opportunity to consolidate those markets. It’s a key part of our strategy and the pipeline is promising.”

Oriel Securities analyst Paul Checketts thought the company was in a position to buy a sizeable family outfit in America worth several hundreds of millions of pounds.

“There’s a feeling there are plenty of options out there and you do get the feeling some of the bigger options are in play,” Checketts said.

Despite a slowdown in western economies, the FTSE 100 conglomerate raised its revenues two per cent to £2.4bn and cranked up its payout eight per cent to 7.15p. One dark spot was the UK and Ireland. In a signal of tough times to come for the region, Bunzl saw sales fall five per cent to £493.7m, though margins improved. The firm’s net debt grew to £745.3m.

Shares in Bunzl climbed 6.5p to close at 708.5p.