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Finsbury to create dominant baking company with £60m deal

Finsbury Food, the cake maker, has swallowed one of its oldest rivals in a deal that would create a new dominant force in British baking.

Finsbury, which is best known for making celebration and novelty cakes, has acquired Fletcher’s Bakeries, a big supplier of private label bread, rolls and other products to restaurants, hotels and pubs.

The Telegraph first reported that advanced talks were taking place for a deal which would double Finsbury's size.

Fletcher’s was founded in Sheffield in 1895 and claims to be the largest fresh and frozen bakery group in the UK. The business has 1,000 employees and as well as supplying the restaurant and hotel trade, its big high street customers include Marks & Spencer, Sainsbury’s and Tesco.

Industry sources said Finsbury’s annual sales would jump from around £170m to £300m. Fletcher’s is owned by Vision Capital, the private equity firm. In 2006, it paid £160m to buy a collection of business including Fletchers Bakeries, Park Cakes, and Smiths Flour Mills from Northern Foods. Earlier this year, Vision began looking for a buyer for Fletchers.

"In addition to its exposure to the retail market, Fletchers will also provide access to the attractive bakery foodservice market, which is currently worth around £900m per year", said James Murray, partner at KPMG who advised Vision Capital on the sale of Fletchers.

The deal will be a return to form for Finsbury, which has grown rapidly through acquisitions, buying seven businesses in eight years. However, more recently, it has been focusing on shrinking its debt pile. Last year, it sold off Genius Foods, its gluten-free bread brand, for £21m to pay off borrowings.

"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," John Duffy, chief executive of Finsbury Food, said.

Due to the size of the acquisition the deal will be treated as a reverse takeover and will require FInsbury Food shareholders to approve the deal.

Finsbury Food said today that it has had positive trading since its year end in June 2014, with sals 5pc higher than the previous year through a combination of volume, mix and price.

Source: www.telegraph.co.uk - 10 October 2014