REG - Finsbury Food Group - Increased Stake in European Distribution Business

Finsbury FoodAnnouncement

21/02/2022 07:15

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RNS Number : 2033C  Finsbury Food Group PLC  21 February 2022

 Date:          21 February 2022
 On behalf of:  Finsbury Food Group Plc ("Finsbury" or "the Company")
 For immediate release

 

Finsbury Food Group Plc

Increased Stake in European Distribution Business

 

Finsbury Food Group Plc (AIM: FIF), a leading UK speciality bakery
manufacturer of cake, bread and morning goods for both the retail and
foodservice channels, is pleased to announce that its wholly owned subsidiary
Lightbody Holdings Limited has today entered into an agreement to acquire a
further 35% of the issued share capital of Lightbody-Stretz Limited
("Lightbody-Stretz") from Phaste S.a.r.l. ("Phaste"), bringing its holding to
85% (the "Acquisition"), and has also entered into an option agreement to
acquire the remaining 15% after two years (the "Option Agreement"). The
Acquisition is expected to be completed later today. Lightbody-Stretz is the
holding company of the Group's European distribution business (Lightbody
Europe SAS ("Lightbody Europe")) operating primarily in the French and Benelux
markets and distributing products produced by the wider Finsbury group for
nearly 20 years.

 

The Acquisition is being undertaken on a cash free / debt free basis with the
headline consideration being €7,137,000 subject to a subsequent true-up
pursuant to a customary completion accounts mechanism. Under the Option
Agreement, the consideration for the remaining 15% stake in Lightbody-Stretz
will be fixed at the time of its acquisition based on a multiple of the EBITDA
of Lightbody Europe in the 12 months leading up to the exercise of the option,
again on a cash free / debt free basis (with a subsequent completion accounts
true-up). Phaste has also been granted a put option to require Finsbury to
acquire the remaining stake on identical terms. All consideration under the
Acquisition and the Option Agreement will be settled in cash.

 

In the year to 26 June 2021, Lightbody Europe reported a net profit after tax
of €2.3m and the business has continued to deliver strong growth through the
first half of the 2022 financial year. It has gross assets of €13.5m as at
26 June 2021. The Acquisition is in line with the Company's M&A strategy
and the Company considers that securing a majority stake in this business will
enhance its capacity to support the business and deliver growth outside of its
primary UK markets. The Acquisition will be earnings accretive.
Operationally the business will continue to be managed on a day-to-day basis
by the current management team.

 

Lightbody-Stretz has historically been consolidated into the group accounts as
a subsidiary with a corresponding non-controlling interest on the basis that
Lightbody-Stretz is commercially dependant on Finsbury for supply of product
into its distribution channels.

 

Related Party Transactions

 

Phaste is owned by Philippe Stretz and has the right to appoint a director of
Lightbody-Stretz. Phaste is a director of Lightbody-Stretz and the Président
of Lightbody Europe. As such, Philippe Stretz is deemed a related party of
Finsbury for the purposes of Rule 13 of the AIM Rules for Companies (the "AIM
Rules").

 

Lightbody Europe occupies premises leased from Coysevox 2, a company
controlled by Philippe Stretz and as part of the transaction Lightbody Europe
has entered into non-binding heads of terms with Coysevox 2 to extend the
current lease beyond its expiry in July 2022 for a period of nine years with
the option to break at six years (the "Lease"). The annual rent will be
€75,500 p.a. subject to annual inflation-based increases. This will enable
Lightbody Europe to continue its operations without disruption.

 

Lightbody Europe will continue to be run by its current management team on a
day-to-day basis and the Company is pleased to have secured the services of
Philippe Stretz for two years following completion with Phaste continuing in
the role of President of Lightbody Europe.

 

The Acquisition, together with the entry into the Option Agreement and the
Lease, constitute a related party transaction under Rule 13 of the AIM Rules.
As such, the Directors consider, having consulted with the Company's nominated
adviser, Panmure Gordon, that the terms of the Acquisition, the Option
Agreement and the Lease are fair and reasonable insofar as the Company's
shareholders are concerned.

 

 

John Duffy, Chief Executive of Finsbury, commented:

 

"We are pleased to announce this further investment in our French subsidiary,
which increases our stake to 85%, supporting the successful local management
team's growth ambitions and our continued desire to invest behind our European
growth. This acquisition is aligned to the Company's M&A strategy as the
Board continues to grow the Group both in the UK and in Europe, including the
potential for meaningful acquisition."

 

 

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which is part of domestic UK law pursuant to the
Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon
publication of this announcement, the inside information (as defined in UK
MAR) is now considered to be in the public domain.

 

Contact:

 

 Finsbury Food Group                                                                    www.finsburyfoods.co.uk (http://www.finsburyfoods.co.uk)  029 2035 7500

 John Duffy (Chief Executive)

 Steve Boyd (Finance Director)

 Panmure Gordon (UK) Limited                                                                                                                      020 7886 2500

 Oliver Cardigan (Corporate Finance)

 Atholl Tweedie

 Erik Anderson (Corporate Broking)

 Edward Walsh

 Alma                                                                                   finsbury@almapr.co.uk (mailto:finsbury@almapr.co.uk)      020 3405 0205
 PR

 Sam Modlin

 Rebecca Sanders-Hewett

 David Ison

 Molly Gretton

 

 

 

 

finsbury@almapr.co.uk (mailto:finsbury@almapr.co.uk)
 

 

020 3405 0205

 

Notes to editors:

·      Finsbury Food Group Plc (AIM: FIF) is a leading UK manufacturer
of cake and bread bakery goods, supplying a broad range of blue-chip customers
within both the grocery retail and 'out of home eating' foodservice sectors
including major multiples and leading foodservice providers.

 

·      The Company is one of the largest speciality bakery groups in the
UK and, with its Overseas division, has sales in the financial year ending 26
June 2021 exceeding £313m.

 

·      The Company's bakery product range is comprehensive and includes:

·      Large premium and celebration cakes.

·      Small snacking cake formats such as cake slices and bites.

·      Artisan, healthy lifestyle and organic breads through to rolls,
muffins (sweet and savoury) and morning pastries, all of which are available
both fresh and frozen dependent on customer channel requirements.

·      Gluten Free bread, morning goods and cake ranges.

 

·      The Company is one of the largest ambient cake manufacturers in
the UK, a market valued at £1bn (source: IRI 52 w/e 4th December 2021). The
retail bread and morning goods market has a value of £5.2 billion (source:
Kantar Worldpanel 52 w/e 26th December 2021). The retail Free From cake market
is valued at £54 million (source: Kantar Worldpanel 52 w/e 26th December
2021). The retail Free From bread & morning goods market is valued at
£153 million (source: Kantar Worldpanel 52 w/e 26th December 2021).

 

·      The Company comprises a core UK Bakery division and an Overseas
division:

·      The UK Bakery division has manufacturing sites in Cardiff, East
Kilbride, Hamilton, Salisbury, Sheffield, Manchester, and Pontypool.

·      The Overseas division comprises the Company's 85% owned company,
Lightbody Stretz Ltd, which supplies and distributes the Group's
UK-manufactured products and third party products, primarily to Europe, and
the Company's manufacturing facilities in Rybarzowice and Zywiec in Poland.

 

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