Finsbury Food Group acquires gluten free bakery manufacturer Ultrapharm

UK – Finsbury Food Group Plc, a leading speciality bakery manufacturer, has acquired 100% of the share capital of the gluten free bakery manufacturer Ultrapharm Limited.

According to the company, the acquisition of Ultrapharm supports the Group’s ongoing strategy to further diversify its product capability into high growth areas.

The opportunity to invest in the acquired sites and to expand the Group’s existing facilities to manufacture Free From products, a category of which the Group has previous expertise, provides significant upside sales potential to the Group in a growing segment.

Established in 1993, Ultrapharm employs more than 240 staff across manufacturing sites in the UK and Poland.

As a specialist ‘Free From’ bakery, the business has an extensive product range including bread, buns & rolls and other morning goods.

Ultrapharm has a diverse customer base with long term blue-chip customers, including Finsbury itself, where it supplies Free From products to Lightbody Europe.

“We are delighted to have secured such a valuable strategic acquisition, one that presents the Group with a significant opportunity to access an exciting and high growth marketplace,” said John Duffy, Chief Executive of Finsbury Food Group plc.

“Ultrapharm has a robust market position both in the UK and Europe, extensive technical ability and strong relationships across a high quality and diverse customer base.

This provides Finsbury with the opportunity to build upon both businesses existing retail relationships, as well as unlocking further commercial opportunities.

Alongside the growth opportunities this acquisition brings, in line with the Group’s strategy, it further diversifies us by geography and category; giving us a further foothold in Europe and allowing us to diversify into the Free From market.

We look forward to welcoming Ultrapharm to the team and investing in the wider Group to capitalise on such a significant opportunity for growth.”

As demand for Free From products has expanded from dietary requirement to a lifestyle choice, the UK Free From Bread & Morning Goods market has grown 92% over the last four years.

This is with the outlook set for further growth over the next five years in line with the continued growth forecast for the wider UK Free From Grocery market.

In EMEA, the Gluten Free Bakery market is forecast to grow at a CAGR of 10.6% over the period 2017-21.

The Board believes that there is a sizeable opportunity to grow the business across a number of channels.

For the year ended 31 December 2017, Ultrapharm generated EBITDA of US$1.86 million and profit before tax of US$0.93 million which have continued to grow since year end.

Revenue generated was US$22.64 million, up 35% from US$16.84 million for the comparative period in 2016.

As at period end, gross assets were US$12.84 million. The acquisition will be earnings accretive immediately post completion.

The total consideration payable is split with US$19.74 million payable in cash at completion, up to US$3.48 million payable in annual instalments to the period to 30 June 2021 subject to the continued employment of key management.

This is also subject to a final incentive payment subject to performance criteria over the period to 30 June 2021 estimated at approximately US$1.16 million and capped at US$5.81 million for regulatory purposes.

The consideration will be funded from the Group’s existing cash and debt facilities.

Finsbury was advised by Stamford Partners LLP and Gambit Corporate Finance advised the shareholders of Ultrapharm on the transaction.

“We are delighted to be joining the Finsbury Group and looking forward to growing Ultrapharm’s exciting prospects with their support,” commented Marc Lewis, Chief

Executive of Ultrapharm.

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