Israel’s Eshbal Functional Food is on the cusp of striking another acquisition after signing a binding letter of intent to buy Texas-based Gluten Free Nation.
Eshbal said in a statement that it entered an agreement with Starcall Broadcasting, otherwise trading as Gluten Free Nation, on 27 June to acquire the maker of gluten-free sweet and savoury bakery products. The line-up includes cookies, cakes and buns, which are distributed through the retail and foodservice channels.
The approach for Gluten Free Nation follows Eshbal’s acquisition of Swonder Bread in June. Also based in Israel, Swonder Bread produces gluten-free, plant-based sprouted-grain sourdough and vegan breads.
Eshbal described the potential acquisition of Gluten Free Nation as “arm’s length”, a deal that would be subject to approval from Canada’s TSX Venture Exchange on which it was listed in April.
CEO Tomer Bar Meir said: “This agreement supports our continued strategy of combining organic growth with strategic acquisitions to accelerate market entry.
“We’re excited about the potential to integrate Gluten Free Nation’s product line and leverage its customer relationships to further expand Eshbal’s North American presence.”
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By GlobalDataEshbal produces better-for-you gluten-free bakery products using natural ingredients such as teff and chia. Its vegan, low-carb and sugar-free portfolio also includes protein snacks and dietary supplements.
It owns the Barili brand of pita breads, buns and cookies, and also the Caragil line of flours and cake mixes.
While the company supplies foodservice and retail in Israel, it recently expanded into North America following its reverse takeover with Canada-based Hakken Capital Corp. by which it gained a listing on the TSX Venture Exchange.
Eshbal said the acquisition of Gluten Free Nation will comprise both cash and its own shares, with additional performance-based payments tied to future revenue.
The final amounts will be determined after a due-diligence process is completed and the signing of a definitive deal agreement.
Meanwhile, Swonder Bread uses a fermentation process to produce its sprouted- grain sourdough.
The acquisition included Swonder Bread’s recipes, trademarks, production equipment and inventory.
Eshbal indicated in a statement announcing the deal that the acquired intellectual property could serve as a “foundation” for future North American offerings.
It said the company agreed to pay C$150,000 ($110,361) for the Swonder Bread assets over three years.
Commenting on the transaction, CEO Meir said: “From day one, M&A has been a key part of our strategy – and this transaction represents one of the many steps we intend to take.
“Swonder Bread brings unique and hard-to-develop know-how that fits perfectly with our long-term goals. We see immediate opportunities to grow this business in Israel, and we believe the underlying technology offers exciting potential for future product development in North America as well.”
