Irish food maker Valeo Foods Group has struck a deal to buy local rival Jacob Fruitfield Food Group.
The transaction, which remains subject to competition approval, would form a business with annual sales of EUR300m (US$425.2m).
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Valeo, which is controlled by private-equity firm CapVest, was created last year when it was spun off from agribusiness group Origin Enterprises. It owns brands including Shamrock baking ingredients, Batchelors baked beans and Erin Cooking sauces.
Jacob Fruitfield was formed in 2004 when Fruitfield Foods acquired Irish Biscuits from Danone. It owns Jacob’s biscuits, Fruitfield jams and Silvermints confectionery.
Under the terms of the agreement, Valeo will fund the acquisition of Jacob Fruitfield through cash, a vendor loan note and the issue of new equity in its business.
Origin Enterprises will buy EUR7.9m (US$11.3m) of the new equity in Valeo. If Valeo’s acquisition of Jacob Fruitfield is approved, the share purchase would leave Origin with a 32% shareholding in the combined business.
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By GlobalDataThe announcement comes three months after reports that claimed Valeo and Jacob Fruitfield were in talks over a possible deal.
Sean Fitzpatrick, who leads CapVest and is chairman of Valeo, said: “Given the very tough trading environment, growing the business to allow investment behind our brands makes strong commercial sense. Our acquisition of Jacob Fruitfield is a significant step in what is likely to be an ongoing process of further consolidation in the Irish food sector. The enlarged Valeo that will emerge from this deal will be a more diversified and resilient Irish food company, well positioned for further growth.”
Jacob Fruitfield CEO Seamus Kearney is set to become Valeo’s chief executive should the deal be approved. He added: “Bringing together these great Irish products into a single entity is the right response in the context of the challenges and opportunities facing the Irish consumer food market.”
The deal remains subject to a number of conditions, including approval from Ireland’s competition watchdog.
