Foods group IAWS is spending £41 million (€52 million) on a major expansion of its consumer foods division with the acquisition of Delice de France, a privately-owned British group which supplies continental breads, savouries and confectionery products to the British catering and food service industry.
The acquisition is complementary to IAWS's existing Cuisine de France business both in geographical terms and in terms of the route to market. An IAWS spokesman, Mr Owen Killian, said while Cuisine de France has a similar range of products to Delice, it sells into the retail trade while Delice sells to the catering and food service market, mainly in the UK.
The acquisition of Delice may also lead IAWS to substantially upgrade its plans for a Cuisine de France bakery in Nottingham. This is still at the planning stage, but Mr Killian said that as Delice buys in its products from outside suppliers, there is scope for the Nottingham plant to supply both Cuisine and Delice operations in the UK.
Based in Southall in London, Delice services more than 7,000 catering and food service outlets in England, Scotland, Wales and Northern Ireland. The group has also recently expanded into the Republic with an operation based in Dublin, although this expansion is still at a very early stage. Delice, unlike Cuisine which bakes its own products, is primarily a distributor and sources its products from bakeries on the continent. In contrast, Cuisine de France services more than 4,500 retail outlets in Ireland and the UK from its own bakery.
Delice was founded in 1987 by Mr Phillippe Signolet and the company is still owned by his family interests.
IAWS is paying an initial £24 million sterling (£28.2 million) for Delice, with a further £11 million sterling (£13 million) in profit-related earn-out payments over four years. The British group had sales of £27 million sterling (£32 million) in the year to November 1998, with operating profits of £3.6 million sterling (£4.2 million) and after-tax profits of £2.9 million sterling (£3.4 million).
The group is being bought on a hefty 12 times earnings, but IAWS chief executive Mr Philip Lynch said that the acquisition will be earnings-enhancing with sales and profits at Delice rising by 25 per cent a year in recent years.
He added: "The acquisition of Delice de France presents IAWS with exciting new growth opportunities in Irish, UK and international markets. Delice is one of the fastest growing companies in this high growth sector of the UK economy. "Delice is sectorally and geographically compatible with Cuisine de France. Delice supplies the food service and catering trades and is a recognised market leader with a reputation for excellence. Their combined operations gives IAWS a major presence in the UK food market and a national distribution network for its food products," Mr Lynch said.
IAWS acquired Cuisine de France for £51 million in October 1997 and since then the company has grown strongly. Production capacity has been trebled with the completion of a £15 million manufacturing plant in Dublin while the group has expanded into the UK.
