Patisserie Valerie

Patisserie Valerie is a chain of cafés that operates in the United Kingdom. The chain specialises in cakes, and its menu included continental breakfasts, lunches and teas and coffees. The company went into administration in January 2019, prior to a management buyout funded by Causeway Capital Partners.

Patisserie Valerie
Pâtisserie, café
GenreCafé chain
FateManagement buyout
Founded1926
FounderMadame Valerie
HeadquartersBirmingham, England, UK
Number of locations
96 (2019)
Area served
United Kingdom
Key people
Steve Francis, Chief Executive Officer
Websitewww.patisserie-valerie.co.uk

History

Foundation
The Sutton, London branch in Sutton High Street

According to Helene (Leni) Vermeirsch, the niece of the founders, Patisserie Valerie was first opened in 1926 on the corner of Dean Street and Old Compton Street in Soho, London by Esther van Gyseghem, born in Ostend, Belgium on 22 April 1900 and her husband Theophile (Theo) Vermeirsch. There is not known to have been a Valerie in the founders' families, but Esther came to be referred to as Madame Valerie. Theo died in 1947, and Esther ran Patisserie Valerie alone until she retired in 1965. Leni Vermeirsch thinks that her aunt sold the business to an Italian businessman based in Soho. The Soho Clarion magazine said that the Fonteyn family founded Patisserie Valerie; there is some evidence of them in Soho and in the catering business.[1] Patisserie Valerie remained at its original location until it was bombed out during World War II, and reopened in nearby Old Compton Street after Theo and Esther spent a short time in Norfolk.[2]

The Scalzo brothers bought it in 1987 from descendants of the founder, and grew the business to nine branches, including shops in Piccadilly and Kensington.[3][4] Leni Vermeirsch said when Patisserie Valerie was struggling in early 2019 "What ended up being called Patisserie Valerie did not bear any resemblance to the original one".[1]

Expansion

In 2006, Luke Johnson's Risk Capital Partners acquired the Scalzo brothers' controlling stake in the company.[5] At the time of the acquisition, Luke Johnson said:[2]

We have significant experience of rolling out successful food and drink concepts, including Pizza Express, Strada and Giraffe. Patisserie Valerie is a much-loved institution with tremendous heritage. We are confident there are many upscale locations across Britain's cities that would love the authentic pastries, cakes and savouries supplied by Patisserie Valerie.

The chain has expanded rapidly since 2006, growing from eight shops in 2006 to 192 as of May 2017. It opened its first shop in the Republic of Ireland in 2017, in Debenhams in Blanchardstown Centre.[5][6]

A selection of their cakes are now available in many Sainsbury's stores, also there is the option to buy online and collect personalised and unstocked items in-store.

Stockmarket listing

In April 2014 the company announced plans to raise £33m on the London Alternative Investment Market, using the sum to reduce its debt.[7]

Share suspension and collapse into administration

Trading in the shares of Patisserie Holdings, the parent company of Patisserie Valerie, were suspended on 10 October 2018 following the discovery of potentially fraudulent accounting irregularities, which had led to the possibility that there had been a material mis-statement of the company’s accounts. It was widely reported in the press that there was a multimillion pound black hole in the company's accounts. Luke Johnson, the company chairman, said: "We are all deeply concerned about this news and the potential impact on the business".[8][9]

On 11 October, the company announced that there was a material shortfall between the reported financial status and the current financial status of the business and that without an immediate injection of capital the directors were of the view that there would be no scope for the business to continue trading in its current form.[10]

On 12 October, Hertfordshire police issued a statement saying that: "A 44-year old man from St Albans has been arrested on suspicion of fraud by false representation. He has been released under investigation." It was widely reported that the individual concerned was Chris Marsh, the firm's finance director.[11][12] The Serious Fraud Office announced on its website that it had opened an investigation into an individual at the company.[13] Later that day the company announced details of a rescue plan under which it would borrow £20 million from Johnson[14] and place 31,451,100 ordinary shares at 50 pence to raise new capital of approximately £15.7m before payment of expenses.[15] The rescue plan prevented the imminent bankruptcy of the company and subsequent loss of 2500 jobs, but was criticised in The Daily Telegraph as being against the interests of smaller shareholders.[16]

On 14 October it was reported that two unauthorised and unreported overdrafts of almost £10 million had been discovered.[17]

On 22 January 2019, the firm announced that it had collapsed into administration following failed talks with banks, which the company stated was a "direct result of the significant fraud".[18] The collapse will lead to the immediate closure of 70 of the nearly 200 stores and concessions operated by the group, leading to the loss of around 900 jobs.[19]

On 8 February 2019, Sports Direct made an offer of £15 million for the firm but a few days later, the administrator KPMG rejected it saying that it would need to offer up to £2 million more for it.[20]

Management buyout

On 14 February 2019 Patisserie Valerie announced its administrators, KPMG, had concluded an agreement for a management buyout funded by Causeway Capital Partners to acquire the assets and business of the chain from administration for a total of £13m.[21][22]

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References
  1. Ben Morris (6 February 2019). "Patisserie Valerie: Unravelling the history of the café chain". BBC News. Retrieved 6 February 2019.
  2. Whitehead, Jennifer (20 September 2006). "C4 chairman Johnson buys stake in Patisserie Valerie". Brand Republic. Retrieved 28 July 2011.
  3. "Patisserie Valerie set for new growth". Bakery Info. 29 September 2006.
  4. Quinn, James (15 March 2014). "Sunday interview: Patisserie Valerie's Luke Johnson". The Daily Telegraph. Retrieved 29 November 2015.
  5. Anderson, Elizabeth (27 November 2015). "Afternoon tea boosts profits at Patisserie Valerie". The Daily Telegraph. Retrieved 29 November 2015.
  6. Gerrard, Bradley (17 May 2017). "Patisserie Valerie eyes more overseas stores after Irish expansion". The Daily Telegraph. Retrieved 9 November 2017.
  7. "Patisserie Valerie firm plans share flotation". BBC News. 23 April 2014. Retrieved 29 November 2015.
  8. "Patisserie Valerie shares suspended over '£20m accounting black hole'". guardian.com. Guardian News and Media Limited. 10 October 2018. Retrieved 10 October 2018.
  9. "Patisserie Valerie shares suspended over multi-million pound black hole in its accounts". London Evening Standard. 10 October 2018. Retrieved 10 October 2018.
  10. "Further trading update - RNS". London Stock Exchange. 11 October 2018. Retrieved 6 December 2018.
  11. "Patisserie Valerie chairman pumps in £20 million to stave off collapse". The Guardian. Retrieved 6 December 2018.
  12. "Patisserie Valerie finance chief Marsh arrested amid fraud probe". Sky News. Retrieved 6 December 2018.
  13. "Patisserie Holdings PLC - Serious Fraud Office". Sfo.gov.uk. 12 October 2018. Retrieved 6 December 2018.
  14. "Trading update and proposed placing - RNS". London Stock Exchange. Retrieved 6 December 2018.
  15. "Result of placing - RNS". London Stock Exchange. Retrieved 6 December 2018.
  16. "£30m rescue deal ignored by Patisserie Valerie bosses". The Daily Telegraph. 13 October 2018. Retrieved 6 December 2018.
  17. Shah, Oliver (14 October 2018). "Patisserie Valerie's secret overdrafts". The Sunday Times. ISSN 0956-1382. Retrieved 14 October 2018.
  18. "Patisserie Valerie collapses into administration". 22 January 2019.
  19. Butler, Sarah; Wood, Zoe (22 January 2019). "Patisserie Valerie falls into administration as bank talks fail". The Guardian. London. Retrieved 22 January 2019.
  20. "Sports Direct's Mike Ashley cancels Patisserie Valerie bid". BBC News. 10 February 2019.
  21. Butler, Sarah (2019-02-14). "Patisserie Valerie saved in buyout backed by Irish private equity firm". The Guardian. ISSN 0261-3077. Retrieved 2019-02-14.
  22. Lake, Emma (14 February 2019). "Patisserie Valerie sold to Irish private equity firm for £13m". The Caterer. Retrieved 15 February 2019.
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