Bakery acquisitions on the high

- Last updated on GMT

Related tags: Spooner vicars, Rank hovis, Bread, Ralcorp

Squeezed by tight margins owing to high raw material costs and a
powerful retail sector reluctant to pass on price increases,
players across the bakery sector are striving to find different
solutions in order to sustain, rebuild and improve their
businesses, writes Lorraine Heller.

A wave of acquisitions in the last month underline a new impulse for change.

Flowers Foods to buy Royal Cake Company

Flowers Foods, a leading US bakery, announced yesterday its plans to acquire bankrupt Royal Cake Company, subject to approval by the bankruptcy court.

Royal Cake, which had a 2004 turnover of $24m, filed for bankruptcy in February. It produces cookies, cereal bars and creme-filled cakes that are sold under the Royal, Bakers Best, and private label brands.

"Due to increased demand for our snack cake products, we need additional production capacity and Royal is a fine bakery,"​ said George E. Deese, Flowers Foods' president and chief executive officer.

Rank Hovis acquires Finedon Mill

Rank Hovis, one of the major names in the UK's milling and baking world, bought Finedon Mill for an undisclosed sum on June 28.

"The acquisition of the mill will allow Rank Hovis greater flexibility in both production and distribution, which will increase our ability to service customers throughout the UK and Ireland,"​ said a company spokesperson.

Over the past two years, Rank Hovis has invested over £13m (€19m) in updating its milling capacity and installing specialist plants, such as flour heat treatment, across its estates.

It recently announced the intended closure of its Hull mill as part of its ongoing manufacturing strategy review.

Ralcorp Holdings acquires Medallion Foods

US snack maker, Medallion Foods, has been acquired by food manufacturer Ralcorp Holdings.

The purchase was completed on June 22, and was financed primarily through Ralcorp's borrowings under its existing $150m revolving credit facility.

Medallion, which had net sales of $42.8m for the year ended December 31 2004, will become a wholly owned subsidiary of Ralcorp and will operate as part of the Ralston Foods cereal and snack business.

Ralcorp, whose main products include frozen bakery goods and snacks, will incorporate Medallion Foods' specialist corn-based snack products into its line.

"Medallion's products will greatly expand Ralcorp's current product offerings in the growing snack category,"​ said the company in a statement.

Spooner Vicars changes hands

Spooner Vicars, one of the UK's leading bakery equipment manufacturers, has been bought for an undisclosed sum by Avalanche Holdings, owned by the engineering entrepreneurs Bruce Stimpson and Wayne Poteet.

The acquisition of the company, which has an annual turnover of £22m (€32m), was completed on June 10.

The new owners said they will activate a long-term investment programme to maximise Spooner Vicars' position in the global marketplace, focusing on product development, increased quality and improved service.

"A new strategy will provide a major opportunity for expanding the company across its diverse range of market segments and create a more innovative and competitive Spooner Vicars,"​ said the new owners of the company, which currently exports two thirds of its food equipment production for clients such as Nabisco, Campbell, Kraft and United Biscuits.

"We are looking at growing Avalanche into a £200m group within the next three to five years through acquisition and growth in food and pharmaceutical processing and equipment,"​ said Stimpson.

The deal, which took two years to complete, sees the business debt-free and in a position to invest.

Related topics: Markets

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