10th Oct 2014 06:53
LONDON (Alliance News) - Cake and bread bakery goods maker Finsbury Food Group PLC Friday said it has acquired the Fletchers Group, a group of bakeries, for around GBP56 million in a reverse takeover.
Finsbury Food's current market capitalisation is just GBP41.2 million.
Finsbury Food said it will pay for the acquisition, which it is acquiring on a debt-free/cash-free basis, via a new debt facility and an oversubscribed placing to raise GBP35 million at a price of 59 pence per share. Finsbury Food shares closed Thursday at 61.00p, down 0.8% on the day.
Sheffield-based Fletchers Group produces both fresh and frozen baker products, such as baguettes, doughnuts and pastries, to high-street retailers and foodservice customers, including J Sainsbury PLC, Tesco PLC and Marks & Spencer Group PLC.
"Fletchers is seeing the benefits of substantial capital expenditure in recent years and has secured a number of significant contracts since the March 29, 2014 financial year-end which will benefit sales in the second half," the company said in a statement.
Finsbury Food said it expects the new business to be earnings enhancing during its first full year of ownership, and said it allows the group to benefit from significant cash generation that will support a progressive dividend policy going forward.
"Fletchers is a highly complementary business, which broadens the Finsbury UK speciality bakery product, customer and channel growth potential and will provide a strong platform for the group to address the food-service markets. We believe the enlarged group will be in a strong position for new licensing arrangements, joint ventures and stronger customer and brand relationships," said Chief Executive John Duffy in a statement.
Finsbury claims that the enlarged group will be one of the largest speciality bakery groups in the UK, with sales approaching GBP300 million and a broad spread of customers across the food retail and food-service channels.
Due to the size of the acquisition, it will be treated as a reverse takeover and will require the approval of the company's shareholders.
In its statement Friday, Finsbury food also said that trading so far in this year is "positive", with sales since end of June up 5% on the prior year, boosted by a combination of higher volume, mix and prices.
In the financial year ended-June, the group posted a higher pretax profit, after it said a strong first half offset higher input costs in the second half and a slight fall in revenue.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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