Family-owned Ultrapharm, headquartered in Pontypool, Wales, has manufacturing facilities in Poland as well as the UK, producing gluten-free bread, buns, rolls and other “morning goods” to blue-chip customers, including Lightbody Europe, Finsbury and Market & Spencer.
Finsbury will pay an initial £17m ($21.9m) in cash upon completion of the deal, with a further £3m ($3.8m) in annual instalments up to June 30, 2021 – ‘subject to the continued employment of key management’ – and a final incentive payment depending on performance estimated at around £1m ($1.2m).
The acquisition, which will be funded from the Group’s existing cash and debt facilities, will give the Cardiff-based company a greater foothold in the fast-growing European free-from baked goods market, forecast to grow at a CAGR of 10.6% every year until 2022.
Health halo
The British market has grown by 92% in value over the past four years as more consumers switch to gluten-free products due to their perceived health halo.
“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. 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,” said John Duffy, CEO of Finsbury.
“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.”
Last year, Ultrapharm posted a 35% increase in revenue to £19.5m ($25.1m), up from £14.5m ($18.6m) for the comparative period in 2016.
Brand licensing
Finsbury Food Group has a long-standing relationship with the licensed brand sector, manufacturing celebration cakes for some of the biggest entertainment brands in the market, including Disney Thorntons, Weight Watchers and Vogels.
The company’s Village Bakery brand is the UK’s leading rye bread brand, aimed at consumers who want to avoid wheat.