Glenboden M & A Originations

Finsbury acquisitions in UK : is gluten- free the next sugar-free ?

Priority Rating priority rating 3
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Origination Status buyer announcement of company acquisition, April 2008
Asset Yorkshire Farm Bakery (UK), gluten-free breads, cakes and morning goods producer
Buyer Finsbury Foods plc (UK), leading domestic bakery products manufacturer
Seller Arnett family
Buyer Rationale market leadership in new frontier category
Seller Rationale acceptable valuation, larger partner to take the business to the next level
NBs the ‘free from’ market in the UK is worth 180 mln GBP in retail sales
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The ‘free from’ market in the UK is worth 180 mln GBP in retail sales, and is set to double by 2012. More people are turning to a gluten free diet, as intolerance and allergy levels grow. This deal is interesting not only because it helps to define a new frontier category, but also because it’s an example of how food companies are getting excited about entering the medical prescription channel.

With this acquisition, Finsbury’s share in the gluten free market is set to grow to 20%. The valuation seems low for a business that’s growing by 16% in 2008 and has a 16% EBITDA margin, not to mention its exciting positioning. On the other hand, this is another ‘insiders’ deal – since 2005 another Finsbury subsidiary, United Central Bakeries, has been an important off-taker of pre-mixes from YFB.

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Size (€ mln) 5
Sector bakery products
Asset Quality UK niche unbranded
Seller family
Buyer mid-cap plc
P/S 1,0
P/Ebitda 6,3
Type total consideration
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