Finsbury buys free-from bakery business Ultrapharm

Finsbury Food Group has acquired specialist free-from bakery manufacturer Ultrapharm, which supplies Finsbury’s Lightbody Europe business.

Established in 1993, Ultrapharm employs more than 240 staff and manufactures a range of products, including bread, rolls and other morning goods, at sites in the UK and Poland. Its revenue rose 35% year on year to £19.5m in the 52 weeks to 31 December 2017, with the business generating EBITDA of £1.6m and profit before tax of £0.8m.

Finsbury is set to pay around £20m for Ultrapharm in the deal, which comes five years after the company sold its free-from business United Central Bakeries to Genius Foods for a similar amount.

In the past four years, the UK free-from bread and morning goods market has grown 92% as demand has expanded from consumers buying it as a dietary requirement to include those buying it as a lifestyle choice [Kantar Worldpanel]. The market is set for further growth over the next five years in line with the wider UK free-from grocery market. 

Finsbury said the acquisition of Ultrapharm supported its ongoing strategy to further diversify its product capability into high growth areas.

"We are delighted to have secured such a valuable strategic acquisition, one that presents the group with a significant opportunity to access an exciting and high-growth marketplace,” stated Finsbury Food Group chief executive John Duffy.

Finsbury said the deal gave it the opportunity to invest in the acquired sites and expand the group’s existing facilities to manufacture free-from products.

"Ultrapharm has a robust market position both in the UK and Europe, extensive technical ability and strong relationships across a high-quality and diverse customer base,” added Duffy. “This provides Finsbury with the opportunity to build upon both businesses' existing retail relationships, as well as unlocking further commercial opportunities.

"Alongside the growth opportunities this acquisition brings, in line with the group's strategy, it further diversifies us by geography and category, giving us a further foothold in Europe and allowing us to diversify into the free-from market.”

Finsbury is to pay £17m in cash for the business on completion, plus up to £3m in annual instalments until 30 June 2021, subject to the continued employment of key management, and a final incentive payment estimated at around £1m and capped at £5m. The deal will be funded from the Finsbury’s existing cash and debt facilities.

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