Feeding time

Charles 12 Comments



Yorkshire-headquartered Yew Holdings has been acquired by rival funeral services provider Dignity in a deal priced at £58.3m.

Dignity has also announced plans for a share placing to raise £24.2m before expenses. The acquisition comprises 40 funeral locations and two crematoria located in the north of England.

Dignity added there were “significant opportunities” to improve the financial performance of Yew’s funeral portfolio. It said the deal should lead to a “high degree of operational efficiency”.

In a statement the company said: “Like Dignity, Yew trades under established local brand names. 

More here and here

Be sober, be vigilant; because your adversary the devil, as a roaring lion, walketh about, seeking whom he may devour – 1 Peter 5:8

Hat tip: The Man


  1. Charles

    Well, I must say that when it comes to a funeral, ‘a high degree of operational efficiency’ is, of course, the very thing I want most from my funeral provider. Bugger raw humanity, I’ll take out some of those shares today.

  2. Charles

    Probably because they are none the wiser Kathryn. The names Yew Holdings and Dignity are invisible to the average customer of the funeral directors involved.

    Perhaps if the reports in the press listed the familiar names above the shop fronts (Frank Stephenson & Son, E. Hurton & Son, H.J. Whalley & Sons, John Parkin & Son, The Taylor Funeral Service Ltd etc etc and so on and so forth) as being sold off to become part of the 600+ Dignity PLC multi million £££ profit-making company, then there might be a bit of a whimper of concern – howling is probably asking a bit much!

    Incidentally, interesting use of ‘independent’ (definition: free from outside control,not connected with another or each other…) on the websites of various of the former Yew Holdings’ portfolio of funeral homes – see here http://www.taylor-funerals.co.uk and here http://www.johnparkinandson.co.uk and here http://www.porter-funerals.co.uk/ and here http://www.wellens-funerals.co.uk… as examples – one has to ask, independent of what???!

  3. Charles

    £58 million for 40 funeral offices and two crems? Wow!

    It looks like an awful lot of operating efficiencies will be needed to get any return on that much.. Unless they’ve seriously over-paid?

    I know what I think 🙂

    And I think I know too how they’ll try and ensure they get a profit..

    1. Charles

      Well David, they’ve certainly paid a not insignificant amount for part but not all of the former Yew business. This to me is a very sizeable acquisition and moves the assets of a former private holding Company into the Plc owned sphere

      Anticipating subsequent ‘competition issues’ (and the predecessors of Dignity had their fair share), 20 branches, the Yew head office and their manufacturing business did not form part of the deal and were retained by the previous shareholders (with a separate valuation of £21m). Yew were said to be number 3 in the UK funeral market before their acquisition by Dignity

      For the sale itself, of the forty branches, 38 are freehold. What’s the value of a freehold branch in Northern England? Depends no doubt on the size. 38 x £250K is £9.5m, let’s say £11m. And what’s the value of the freehold for two Crem’s (inc the buildings)? We’re not valuing a site with potential property development, after all. Say £9M for both. That means the property cost element for the deal are £20m

      For the 2012 financial year, unaudited tangible assets for this part of Yew were £24m (which includes pre-paid plans (approx 9,000) and misc stuff inc vehicles etc). Adjusting that to a ’round’ £28.3m, would mean that Dignity paid £30m for goodwill/the ongoing business etc. For the last fin year, this part of Yew carried out 6,197 funerals and 2,611 cremations. (This calculation by me is pretty simplistic i.e. the figure of £30m)

      In Stock Exchange/Institutional ‘market speak’ and to curry flavour with existing and potential investors, we’re informed (by (the full terms of) the press release) that there is a gross income differential of £785 between the two businesses (on the pure funeral side), or in other words 50% (by Dignity) more than Yew ‘produced’. This sounds great doesn’t it and much warm feelings are being felt by Institutional investors (and others) to this hearty news, no doubt! Will Dignity be able to do the same amount of funerals on an ongoing basis, well that’s probably unlikely. I could not (or am I being naive?) honestly believe that they would straightaway significantly hike up all round prices at the former Yew branches……………? There’s bound to be ‘some fall out’ from a combination of higher costs plus the inevitability of the odd new independent operator opening up

      It’s interesting that even though the press release stated “…… It significantly expands Dignity’s presence in the North of England, where the Group has traditionally been underrepresented…………” they clearly were not poorly underrepresented as it wouldn’t have been necessary to acquire a third of the previous 60 branches (because of the competition element)?



  4. Charles

    ‘Dignity said there were significant opportunities to improve the financial performance of Yew’s funeral portfolio. Yew achieved an average income per funeral of £1,565 in the 12 months to July 2012 compared to Dignity’s £2,350 in the year to December 2011.’
    Looks like an ‘opportunity’ of around £785 per funeral just by putting the price up. People of the North be canny in your choice of funeral director.

    1. Charles

      There actually isn’t much choice….. I can count on the fingers of one hand the truly independent FD’s that operate within this area. The staff that I know who work within the group are excellent. Am still slightly in shock after reading this last night, had all kinds of weird coffin dropping dreams!

  5. Charles

    From today’s Times:

    “Analysts at Investec welcomed the Yew deal and re-iterated their “buy” recommendation, raising the target price to £11.77.

    “Dignity shares rose 5p in morning trade to £11, valuing the group at £602 million.”

    Two things strike me. First, this is exclusively a financial-pages story. Nothing in it, so far as we can tell, for the bereaved — nothing for them to celebrate, no pledge of better service, better care. The winners here are the institutional investors and the shareholders.

    Second, a business which cannot translate ‘operational efficiencies’ and economies of scale into lower prices is either cynical or incompetent. Tesco wouldn’t get away with it.

    I’d say that the Dignity business model is highly susceptible to enhanced consumer scrutiny. Ain’t it peculiar that all these moneybags can’t see that? Why do consumer journalists not take up the story?

    The GFG reiterates its ‘sell’ recommendation.

  6. Charles

    The Dignity business model is both cynical and hopeless. They seem content to do fewer funerals for more and more money – maintaining the growth in profit. However – if you follow that to its ultimate conclusion – you end up doing very few funerals for way too much money. The model is bound to fail in the long term.

    It also bothers me that as before – clueless investors lap-up any old nonsense when it comes to investing in funeral plc’s. They never learn. It’s a fragmented industry, putting up prices only works for so long before new competition is attracted to compete at the new price set by the big firms. The endless consolidation doesn’t work long term – even if it produces short term profits from the sale of your little group to a larger group, and so it goes on. The promised ‘economies of scale’ never materialize either. Cheaper coffins, better purchasing power maybe, but those costs are buttons for these companies. Staff, premises, rates and vehicle costs all stay roughly the same.

    You are of course correct Charles – the consumer or buyer of funeral services is nowhere to be seen in this. Totally ignored. The newspapers, radio and TV consumer shows should be all over it – why aren’t they? Laziness, lack of understanding and perhaps, our failure to tell them the real story.

    I won’t be buying any Dignity shares for my old age. I don’t think they would be a good investment.

  7. Charles

    There seems to be this idea among investors that you can’t go wrong if you invest in undertakers because everybody dies whatever the state of the economy. They also swallow the orthodox view that consolidation is a Good Thing per se. Amazingly superficial.

    I contacted a consumer journalist on a major broadsheet. Naff all.

  8. Charles

    Your lack of interest does not surprise me Charles. (If you see what I mean.)

    Whatever happened to proper consumer journalism? I suppose we have few journalists and no editor wants to rock the boat – the big firms are advertisers after all.. and it’s just so much easier to do stories on greedy banks and utility companies.

    Few people are interested in death – they think it’ll never happen to them – or those they love.

    The public eh. What can we do!

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