A bakery group that supplies the UK's supermarket giants has agreed to be taken over in a £143.4 million deal that includes operations employing more than 1,400 people in Scotland.
AIM-listed Finsbury Food is set to be taken into private ownership by Isle of Man asset management firm DBAY Advisors. Investors will receive 110p for each Finsbury share held, a premium of almost 24% to yesterday's 89p closing price.
News of the deal sent shares in Finsbury surging in yesterday's trading, with the stock closing at the offer price of 110p.
READ MORE: Finsbury rolls out takeover plans amid food sector distress
DBAY, which has held has held shares in Finsbury since August of last year, said it believes the bakery group's listing on London's Alternative Investment Market (AIM) is holding it back from pursuing growth opportunities, in particular acquisitions. It said Finsbury's interests will be better served as a private business with “a supportive majority shareholder and access to additional sources of both equity and debt to fund accelerated and sustainable growth”.
“We have been supportive shareholders of the business for over a year and have been impressed with the management team during our ownership, but we strongly believe Finsbury would benefit from transformational M&A including international expansion and this would be better achieved in private ownership without the barrier of the current listing," DBAY chief executive Alexander Paiusco said.
“We look forward to working with Finsbury’s management and employees to accelerate Finsbury’s strategy and unlock the long-term value in Finsbury for all stakeholders.”
In January of this year Finsbury announced the £5.7m acquisition of Coatbridge-based Lees. Established in 1931, Lees employs more than 200 people in North Lanarkshire making the Scottish brand's signature meringues, teacakes and snowballs.
Finsbury also owns Lightbody, which employs 1,100 people in Hamilton making birthday and other celebration cakes, and pre-packed food service specialist Johnstone's in East Kilbride with 120 members of staff.
READ MORE: Head of Lees Foods to retire following £5.7m sale to Finsbury
Finsbury chairman Peter Baker indiciated yesterday that the group is keen on larger acquisitions to beef up its presence in a food manufacturing sector besieged by inflationay pressures.
“For the next phase of the Finsbury Group’s development the business will need to pursue strategic, transformational M&A to achieve the scale required to be successful in an increasingly competitive and demanding market place," Mr Baker said.
“I am confident that Finsbury will thrive under DBAY’s stewardship in the private market, with access to DBAY’s investment and operational support to pursue the current strategy of scaling Finsbury’s buy-and-build M&A in the future.”
Headquartered in Cardiff, Finsbury has offices and manufacturing sites in Wales, England, Scotland, Poland and France supplying cakes and bakery goods to most of the biggest names in the grocery retail and food service sectors. It currently employs about 3,000 people.
READ MORE: Lees' notes impact of energy price rise on food producers
In a trading update in July Finsbury reported a 16% increase in revenues for the year to July 1, which including a partial contribution from Lees amounted to £413.7m. Without Lees, sales would have been 13% higher.
In the core UK bakery division, annual sales including Lees rose 15%, led by a 25% increase within the foodservice unit as the out-of-home food sector recovered from the Covid-19 pandemic. In the overseas division, sales were up by 25%.
In its last full year of trading before being acquired by Finsbury, Lees posted a 30% increase in turnover to £20.9m. The pre-tax loss was cut to £16,761 versus £267,593 previously.
Directors said it was a resilient performance “in what was an unprecedented year in terms of input cost increases on raw materials, packaging, transport and energy, and inflationary pressures pushing up the cost of labour, alongside supply chain disruption".
They added: “The business has been able to mitigate much of the impact through revised pricing and commercial arrangements and supply chain initiatives.”
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