The Finsbury Food Group has strengthened its operations in the ’free-from gluten’ market with the £8.9 million acquisition of Yorkshire Farm Bakery (YFB) and A&P Foods.

YFB is a major manufacturer of gluten-free breads as well as rolls and cakes and is located on a freehold site in Hull. A&P shares the same site and produces gluten-free premixes for YFB, as well as United Central Bakeries, also part of the Finsbury Group.

Both businesses have been acquired by Finsbury from the Arnett family, three of whom will remain involved. Finsbury has created a new trading company, Livwell, and £4.8m will be paid on completion, with the remainder payable in stages, with a final payment of £2.5m in July 2010.

Finsbury group, chief executive Dave Brooks told British Baker: "Yorkshire Farm is the biggest UK supplier of free-from with sales approaching £10m in the UK gluten-free market so this is an excellent opportunity."

In a statement issued by the company Brooks said: "The UK retail market offers huge scope for growth, as more and more consumers choose a wheat-free diet, and the UK medical prescription market brings new opportunities.

"There is significant scope to develop a stronger export business, as awareness grows in Europe. These businesses fit our acquisition criteria and are further evidence of our confidence in our market positioning and trading performance."

The Arnett family was among several entrepreneurs to sell to listed companies and therefore avoid punitive capital gains tax rates. CGT taper relief was replaced at the start of the financial year by a flat rate of 18%.

Combined YFB and A&P sales in the year ended March 2007 were £7.3m, with forecast sales for this year expected to be no less than £8.5m. The acquired net assets are valued at £3.66m.