DUBLIN-BASED Valeo Foods has agreed to acquire biscuit and jam maker Jacob Fruitfield in a deal that will net the Tallaght company’s shareholders a cash windfall of about €30 million.
The biggest beneficiary will be Jacob Fruitfield chairman Michael Carey who owns about 52 per cent of the business and will net some €15.6 million. David Andrews and Michael Tunney own about one-third of the business between them and will earn about €10 million in cash. The balance is held by current and former management.
While no figures were disclosed yesterday, it is understood Jacob Fruitfield had a value, net of debt, of about €70 million. The company’s shareholders are using more than half of the equity proceeds of the transaction to acquire a 26 per cent stake in Valeo, which will assume Jacob Fruitfield’s debt of €38.6 million.
The deal will bring together some of Ireland’s best known food brands, creating a company with a combined turnover of €300 million and 500 employees. Valeo was formed last year in a merger of Batchelors with Origin Foods which owned the Odlums, Shamrock and Roma brands. Other brands in the business include Erin, Squeez, Amigo and Lustre.
The Valeo merger was put together by London-based private equity company CapVest and was worth €140-€150 million. The merged entity had turnover of about €200 million and was 55 per cent owned by CapVest and 45 per cent by Origin Enterprises, an Irish listed agri-company.
Jacob Fruitfield Food Group brought together Fruitfield Foods, which was acquired from Nestlé in 2002, and Irish Biscuits, which was purchased from Groupe Danone in 2004. Its brands include Fig Rolls, Kimberley, Mikado and Coconut Creams, Chef sauces, Fruitfield jams and marmalades, and Silvermints and Scots Clan sweets and confectionery. Mr Carey led this integration.
Jacob Fruitfield made an after-tax profit of €11.1 million in 2009 from turnover of €81.6 million. Last year’s results have yet to be released but are expected to show another profitable year and flat turnover.
Jacob Fruitfield has been restructured in recent years with its manufacturing plants in Tallaght closing and most of its production moved overseas.
Jacob Fruitfield managing director Séamus Kearney will become group chief executive of Valeo. Valeo’s chief executive Peader Kearney – no relation to Séamus – will assist with the integration before leaving the company to pursue other interests.
Séamus Fitzpatrick, co-founder of CapVest, will continue as chairman of Valeo, while Mr Carey and Mr Andrews will become non-executive directors.
The acquisition will be financed by a combination of cash, vendor loan note and new equity.
Both of its existing shareholders will be diluted when the deal completes, with CapVest holding about 42 per cent and Origin owning just shy of one-third of the business.
Finance is being provided by a syndicate comprising Bank of Ireland, AIB, HSBC, Rabobank and Ulster Bank.
The deal is subject to approval from the Competition Authority.
