IAWS acquires Cuisine de France in deal worth £51m

Cuisine de France, the Dublin bakery company which has made French bread an everyday shopping item, has been acquired by the IAWS group in a deal worth £51 million over five years. The two main shareholders in the company, Mr Ronan McNamee and Mr Pat Loughrey, will receive the bulk of the money.

An upfront payment of £40 million is being made by the group, with the remaining £11 million being paid over on the completion of profit targets. The deal is subject to clearance by the Competition Authority. Cuisine de France was established in 1989 and is based in Tallaght, Co Dublin, employing about 150 people in distributing and marketing its par-baked bread and confectionary varieties.

The "par-baked" concept, where bread and cakes are baked till brown and then frozen before their final in-store cooking, has the advantage of minimal waste, allowing outlets to streamline their supply of the end product to suit demand. IAWS will pay its first deferred payment of £3 million in the new year if Cuisine achieves pre-tax profits of £5 million in the year to February 1st, 1998. The remaining £8 million will be paid up to 2002, provided Cuisine's profit targets are met.

The chairman of Cuisine de France, Dr Pat Loughrey, a founder member and one of the two majority shareholders in the company, is understood to have wanted to sell his share of the business for some time.

He and the managing director, Mr Ronan McNamee, hold all the ordinary shares in the company, according to Companies Office records.

While the state agency Forbairt and private investors who put in funds through the Business Expansion Scheme will also benefit from the buy-out, the vast bulk of the money will be divided between Mr McNamee and Mr Loughrey and their families. The two main shareholders and their families will thus both receive close to £20 million each from the initial £40 million payment.

Mr David Martin, the financial director of IAWS, said yesterday that the acquisition involved a series of separate Cuisine de France companies which had cross shareholdings. Members of the management are also believed to have some holdings, while Forbairt has a stake of preferential shares worth £350,000. Cuisine de France built its business on marketing the concept of the baguette - the company employs a telesales team and most of the employees are involved in distribution, delivering the frozen product daily if necessary.

However, the company has since diversified into confectionary and other speciality breads. It provides such varieties as the Italian ciabetta, Turkish hot bread, Walnut & Date bread and Malted Brown Bloomer.

Cuisine de France has centred on outlets which have large turnover of shoppers such as multiples, city centre groceries and garages.

It has about 1,800 outlets in Ireland, 300 of which are in Northern Ireland. It is also strong in Scotland and northern England, having about 550 outlets there. Maintaining the same management team, Cuisine will now aim to increase its foothold in the UK and also make an entry into Belgium, Holland and Germany. The managing director of Kylemore, Mr Brian Hogan, said last night that he did not expect the acquisition to have a major impact on the Irish bakery market but would allow for Cuisine's expansion overseas.

Although Cuisine has a manufacturing plant at its Tallaght headquarters, it buys in most of its products. Kylemore is among its suppliers of par-baked bread products. The acquisition will consolidate a close relationship which Cuisine already had with IAWS, which, through Boland's Mills, mills the French flour used in the produce.