Vision sells Fletchers bakery for £56m

The business was one of four acquired from Northern Foods in 2007

Vision Capital, the UK-based private equity firm specialising in direct secondaries, has sold Fletchers Group of Bakeries to Finsbury Food Group for £56 million, according to a joint statement.

Vision acquired Fletchers as part of a package of four businesses from Northern Foods in January 2007, using capital from Vision Capital Partners VI, a 2006-vintage €353 million vehicle. Vision paid £160 million for the four businesses: Fletchers, a supplier of bakery products to retailers and foodservice; Smiths Flour Mills, a flour milling business; Park Cake Bakeries, a UK developer and producer of cakes and desserts; and Pork Farms, the UK market-leader in savoury pastry products.

Vision declined to comment on the return generated by the sale of Fletchers.

Fletchers managing director Stephen Holding said in a statement that the business has “undergone a significant transformation” since its acquisition by Vision. As well as developing products across a broad category of fresh and frozen baked goods, Fletchers has built a large and growing foodservice business.

For the 12 month period ending 29 March 2014, Fletchers posted a turnover of £95 million and EBITDA of £6 million.

This is the second of the four businesses that Vision has exited, having sold Smiths Flour Mills for an undisclosed amount in June 2007. In August this year Pork Farms acquired the chilled savoury pastry business of Kerry Foods for an undisclosed amount.

Finsbury is a leading manufacturer of premium cake and speciality bread, listed on the AIM market of the London Stock Exchange. The group’s CEO, John Duffy, called the acquisition “a transformational development”, as the two businesses combined will form one of the largest speciality bakery groups in the UK.

“By servicing both the cake and bakery market, through both retail and foodservice, the enlarged group will have a diversified product and customer offering, and greater potential for driving growth for our shareholders,” Duffy said.

According to Finsbury, the £56 million total consideration is to be funded through a “significantly oversubscribed” placing of new ordinary shares, raising £35.0 million at 59 pence per share, and new debt facilities. Due to the size of the acquisition relative to the company, Finsbury said, the deal will be treated as a reverse takeover, thereby requiring shareholder approval.

Finsbury’s directors expect the acquisition to enhance earnings during its first full year of ownership, allowing the group to benefit from “significant cash generation” to support a “progressive dividend policy” for the newly-enlarged group.

Shares in Finsbury were down 1.43 percent at 60.12 pence per share Friday morning, giving the company a market capitalisation of £40.81 million.