Hibernia Foods has paid more than £10 million sterling to buy two consumer goods operations in Britain from US foods giant, Bestfoods. Hibernia has paid for the businesses through a mixture of cash and equity and Bestfoods will have a stake of around 10 per cent in Hibernia when the deal is completed.
Hibernia has bought the Entenmann's branded sweetbaked goods business in Britain and Ireland as well as the Mr Brain's savoury meats business. The acquisition includes a modern production facility in Bristol, licence right to the Entenmann's brand and the Mr Brain's trademark and brand. The businesses being acquired have annual sales of $30 million (£22 million) and will bring Hibernia's sales to over $100 million.
And in a separate development, Hibernia has appointed Credit Suisse First Boston as its investment banker. Asked whether this was a forerunner to adding a Dublin or London listing to its current listing on Nasdaq, Hibernia finance director, Mr Colm Delves, said the group was looking at such a move, but that a listing was unlikely to take place until Hibernia raised fresh equity funding.
An early equity issue by Hibernia seems unlikely even after the Entenmann's acquisition. Earlier this year, Hibernia raised $10.25 million in a private placing of convertible preference shares which convert into ordinary shares at $3.60 each. Hibernia shares were trading at $6 on Nasdaq yesterday, off the recent $7 high but a massive increase on the $1 at which they were trading a year ago. At that $6 price, Hibernia has a market capitalisation of around $40 million.
On the decision of Bestfoods to take a substantial minority share in Hibernia as part of the consideration for Entenmann's, Mr Delves said: "It's important for us to keep an ongoing relationship with Bestfoods." Hibernia is acquiring exclusive rights to the Entenmann's brand in Britain and Ireland and conditional licensing rights to the brand in another 52 countries for which it will pay royalty fees to Bestfoods based on net revenues.
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