Baked goods producer Finsbury Food Group has acquired the low-fat cake specialist Anthony Alan Foods for GBP3.75m (US$7.7m).

Finsbury said it would be acquiring the company's entire share capital, with a portion of the deal based on a performance-related basis.

Some GBP2.9m of the purchase price will be paid in 2009 provided that Anthony Alan's licence deal with the Weight Watchers brand is renewed for a further three years.

Finsbury said the acquisition would complement its focus on the premium, celebration and health sectors - areas where it believes there is significant growth potential.

"Finsbury Food Group currently produces nearly 60% of the Anthony Alan Foods product range," said Finsbury CEO Dave Brooks. "This addition to our group gives us the market leading position in low-fat cakes to complement our leading position in the premium and celebration cakes sectors."

Anthony Alan Foods was founded in 2001 to develop a low-fat cake brand in partnership with Weight Watchers, and directly supplies most UK and Irish food retailers. The deal was welcomed by the company's key partner.

"We have enjoyed a fantastic relationship with Anthony Alan Foods, and the team has done a great job establishing Weight Watchers cakes as the best-selling low-fat cake range in the UK," said Weights Watchers (UK) senior vice president Melanie Stubbing. "Weight Watchers is the 14th largest food brand in the UK, and with Finsbury's support, we can continue with our aim to break into the top ten."

According to analysts TNS, Weight Watchers is the UK's largest low-fat cake brand with a market share of 58%. Anthony Alan recorded sales of GBP11.6m in the year to March 2007, generating a pro-forma profit of GBP0.70m, before tax and interest.