Privately held Fruitfield Foods is to take over French giant Danone's Irish biscuit business in a deal estimated by market sources to be in the region of €100 million.
Fruitfield confirmed yesterday that it had agreed to buy W&R Jacob, the company that owns the Jacob's and Boland's biscuit businesses in the Republic, from Danone.
Neither side would reveal the agreed price, but market sources estimated last night that it would be in the region of €100 million to €120 million. United Biscuits (UB) is to buy the UK-based Jacob's Bakery Ltd from Danone, subject to regulatory approval.
Danone opted to sell W&R Jacob to Fruitfield because selling the operation to UB could have raised competition problems. Fruitfield is not involved in the biscuit business, so the purchase is unlikely to fall afoul of regulators.
Fruitfield chief executive Mr Michael Carey told The Irish Times yesterday that the deal would create a new business, Jacob Fruitfield Food Group, with a total turnover of €100 million, net assets of €94 million and a workforce of 550. He said there would be no immediate need for redundancies.
"It will be one of the largest privately owned Irish food companies," he said. W&R Jacob's products include the Kimberley, Mikado, Coconut Cream and Cream Cracker brands.
It has sales of €70 million a year and accounts for 35 per cent of all biscuits bought in the Republic. Around €10 million of its sales are exports, mainly to the UK. Bank of Scotland (Ireland) provided the debt finance and the working capital needed to develop the expanded group.
The deal will return Jacob's to Irish ownership and unite a number of well-established domestic brands in the one stable. Fruitfield's preserves business includes Little Chip and Old Time Irish marmalades. Its other divisions are responsible for Chef sauces, Silvermints and Scots Clan sweets. Its sales run at about €30 million a year.
"The brands include some of the strongest and most popular in the Irish grocery sectors, providing a secure base for future development," Mr Carey said. He stressed that the company viewed the purchase as a long-term investment.
"The owners are the managers, we are not venture capitalists and we are not a big multi-national," he said. "This is the only thing we've got to focus on and we have to make it work."
UB's chief executive, Mr Malcolm Ritchie, confirmed in a statement that the regulatory hurdles deterred the company from buying W&R Jacob.
"The sale of Jacob's Irish biscuits business to a local company will bypass the potential competition issues that may have been raised had the business been acquired by UB," he said.
The statement also said it was waiting for regulatory approval for the purchase of the Jacob's business in Britain and Northern Ireland.
