Ralcorp Holdings has signed a definitive agreement to purchase Cottage Bakery, a manufacturer of frozen par-baked breads and frozen dough sold to retail and foodservice customers.

Ralcorp, which produces a variety of supermarket’s own label products and frozen bakery goods for restaurant and food service customers, has agreed to pay US$170.8m in cash for the Cottage Bakery business. Additionally, in January next year Ralcorp will also purchase the real estate associated with the business. Ralcorp will finance the deal through borrowings under its existing credit facility.

Cottage Bakery posted gross sales of $125m for the year ended 30 June. Ralcorp said that it anticipates that the acquisition will add between $0.09 and $0.12 to EPS in the first complete fiscal year.

Cottage Bakery will be integrated into Ralcorp’s existing frozen bakery division. It will continue to be head-quartered at Lodi, California, and the existing management team will remain in place, including current president and owner Terry Knutson who will stay on as president of the business.

Knutson said that the acquisition would help Cottage Bakery’s future expansion. “This acquisition enhances Cottage Bakery’s plans to continue growing and improving the business. We will continue to focus on our solid foundation: delivering superior levels of customer service, developing high quality new products, and improving and expanding manufacturing operations,” he commented.

Cottage Bakery operates one manufacturing facility and employs approximately 690 people.

Commenting on the acquisition, Ralcorp Holding said: “We are excited about the addition of Cottage Bakery and its superior management team. Cottage Bakery will allow Ralcorp to continue its growth in frozen bakery products.”