Typhoo has found a worthwhile suitor in Supreme PLC (AIM:SUP), the London-listed distributor that has brought the tea brand out of administration via a £10 million deal, according to analysts.
Although Supreme is better known as a vape distributor, Shore Capital Markets analysts reckon “Supreme comprises admirable entrepreneurship, a strong balance sheet, and a track record for EPS (earnings per share) growth that should be further fuelled by this acquisition”.
They added: “Supreme, which understands proprietary brands and UK retail, speaks to an EPS-accretive deal that also broadens its assortment, so complementing a strategy of broad-based growth in the face of an evolving vape market.”
“The deal with Supreme had been brewing for some time, and there will be relief that the details have been poured over and the acquisition has been agreed,” quipped Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Employees, in particular, will be relieved that their jobs are saved through the Christmas season, although Streeter warned that “it’s highly likely that Supreme will want to steam ahead and find efficiencies to cut costs and try and coax the company back to profit”.
“However, It’s clearly got a bargain brew for Typhoo by buying the brand out of administration. It has loyal custom it can build on, but also will spy new opportunities given tea’s wellness image to tie into the ambitions of its supplements and multivitamin arm.
“There are clearly opportunities ahead to appeal to health-conscious consumers and future Typhoo product launches look likely focus on this trend.’’
Supreme shares spiked 5.3% to 175.8p on Monday.