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Finsbury Food Buys Fletchers for $90 Million

October 10, 2014
Food & Drink
Finsbury Food Group PLC has acquired a group of bakeries from private-equity firm Vision Capital for £56 million ($90.53 million) in an effort to expand its speciality bread business.
 
The U.K. cake and bread manufacturer said it would fund the purchase of Fletchers Group through a combination of a £35 million share placing and new debt facility worth £52 million. It placed 59.3 million shares at 59 pence a share.
 
“It’s a nice complimentary acquisition,” Finsbury Food Chief Executive said in an interview. He expects the acquisition to boost speciality bread revenue to £120 million a year, from £26 million, and the group’s total annual revenues to around £300 million. For the year ended June 28, it reported £175.71 million in revenue.
 
Fletchers owns three bakeries and produces fresh and frozen bread products such as buns and rolls, muffins, bread, baguettes, doughnuts. It also owns the Kara bakery brand, which supplies wholesale bakery products to hotels, restaurant and pubs. “The key part of the acquisition was to own the Kara brand,” Mr. Duffy said.
 
For the year ended March 29, Fletchers reported revenue of £95 million and profit before interest, tax, depreciation and exceptional items of £6 million. Vision Capital originally bought the bakery business from Northern Foods PLC in 2007, as part of a broader £160 million deal for four separate businesses.
 
Finsbury Food’s house broker Cenkos Securities CNKS.LN -6.49%  said the deal was “highly attractive,” noting that it effectively doubled the size of the company and broadened its grocery customer base. The broker has a buy recommendation on the company.
 
At 09:16 GMT shares of Finsbury Food trading almost 1% lower at 61 pence.
 
By Tapan Panchal 
 

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