Finsbury Food Group plc Acquires Fletchers Group
Finsbury Food, (AIM: FIF) a leading manufacturer of cake and bread bakery goods, today announces that it has entered into an agreement to acquire the Fletchers Group ("Fletchers"), the group of bakeries that produces morning goods and specialist bread products for leading UK grocery retailers and foodservice customers.
- The total consideration payable by the Company for Fletchers is approximately £56.0 million on a debt-free/cash-free basis. The consideration is to be funded through a significantly oversubscribed placing of new Ordinary Shares raising £35.0 million at 59p and new debt facilities.
- The Directors expect the Acquisition to be earnings enhancing during its first full year of ownership and allows the Group to benefit from significant cash generation that will support a progressive dividend policy for the Enlarged Group going forward.
- 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. Strategic and financial benefits include:
- complementary product ranges and new food service channels;
- retail customer diversification;
- the benefits of significant capital investment within Fletchers manufacturing; and
- a multi-channel platform for further acquisitions in due course.
- The Acquisition will provide a platform for the Group to address the attractive UK foodservice bakery market, which is worth approximately £900 million per annum, 70 per cent. of which is morning goods. Both Finsbury Food and Fletchers supply products to the growing morning goods sector.
- As part of a trading update accompanying the Transaction, Finsbury Food today confirms it has had a positive trading performance since its year end in June 2014, with sales 5 per cent. ahead of prior year through a combination of volume, mix and price. Since March 2014, Fletchers' financial year has been strong, with sales in line with management expectations. Fletchers is seeing the benefits of substantial capital expenditure in recent years and has secured a number of significant contracts since the 29 March 2014 financial year-end which will benefit sales in the second half.
- Due to the size of the Acquisition relative to the Company, it will be treated as a reverse takeover and, in order for it to proceed, will require shareholder approval and for the Enlarged Share Capital of the Company to be admitted to AIM. An Admission Document containing details of the Enlarged Group and containing a notice of General Meeting will be posted to Shareholders today and is available to view on the Company's website at www.finsburyfoods.co.uk.
John Duffy, Chief Executive of Finsbury Food, commented:
"The acquisition of Fletchers is a transformational development for the Group, and will add scale to the effect that 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.
"By servicing both the cake and bakery market, through both retail and foodservice, the Enlarged Group will have a diversified product and customer offering, and greater potential for driving growth for our shareholders. We look forward to welcoming the Fletchers team and customers into Finsbury Food and continuing to provide our newly broadened customer base with high quality products and service."
Stephen Holding, Managing Director of Fletchers, said:
"Fletchers has undergone a significant transformation since it was acquired by Vision Capital in 2007, and I am very proud of the hard work and dedication of our colleagues which has made the company what it is today. This is an exciting next step for the company and I'm looking forward to the opportunities that being part of the enlarged Finsbury Foods will bring."
This summary should be read in conjunction with the full text of this announcement and the Admission Document, which is being posted to Shareholders today. Defined terms within this announcement have the same meanings as those within the Admission Document.