Finsbury Food Group to Acquire Fletchers Group For £56 Million
Finsbury Food Group, which is one of the UK’s leading cake and bread bakery goods manufacturers, has agreed to acquire the Fletchers Group, which supplies morning goods and specialist bread products to leading UK grocery retailers and foodservice customers, for £56 million from private equity firm Vision Capital.
The enlarged group will be one of the largest speciality bakery groups in the UK, with sales approaching £300 million and a broad spread of customers across the food retail and foodservice channels.
Vision Capital acquired Fletchers from Northern Foods plc in 2007, and since that time has executed a significant turnaround plan resulting in a step change in profitability at the company. Under Vision’s ownership Fletchers has developed high quality products across a broad category of fresh and frozen baked goods, particularly in morning goods. In addition Fletchers has built a large and growing foodservice business, which has the opportunity for further innovation and growth. The Fletchers business will complement Finsbury’s existing cake and bread manufacturing business and provide additional sales opportunities for the combined company, harnessing Fletchers’ long established customer relationships.
The agreement is subject to regulatory and shareholder approval.
Andrew Rich, Partner at Vision Capital, says: “Fletchers is a strong, profitable and growing Company with a leading position in the fresh and frozen baked goods industry. Finsbury is the ideal partner to take Fletchers into the next phase of its development and the combined Group is well positioned to prosper.”
John Duffy, CEO of Finsbury Food Group, says: “The acquisition of Fletchers is a transformational development for Finsbury Food Group, and will add scale to the effect that together we will be one of the largest speciality bakery groups in the UK. 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 Foodservice markets. We believe the enlarged Group will be in a strong position for new licensing arrangements, joint ventures and stronger customer and brand relationships.”
The total consideration payable for Fletchers is approximately £56.0 million on a debt-free/cash-free basis. Finsbury will fund the deal through a significantly oversubscribed placing of new ordinary shares raising £35.0 million at 59p and new debt facilities. Finsbury directors expect the acquisition to be earnings enhancing during its first full year of ownership and that is will allow the company to benefit from significant cash generation that will support a progressive dividend policy for the enlarged group going forward.
