IAWS in talks with US foods firm
IAWS Group is in takeover talks with Orion Food Systems, a branded convenience food company based in Sioux Falls, North Dakota. The Irish agribusiness group may make a bid for the company, which is part of the privately-owned Schwan's Sales Enterprises. Spokesmen for IAWS Group and Orion declined to comment yesterday but sources confirmed they were in talks and that an announcement could be made early in the new year.
The consideration could exceed £50 million (€63.5 million), according to informed sources. A link-up with Orion would fit well with IAWS chief executive Mr Philip Lynch's plans to roll out the Cuisine de France brand of speciality breads and convenience foods across the US. The Irish company already has a foothold in the Chicago area but a move into other territories has been expected for some time. Orion is the leading franchiser of branded food concepts to the convenience store industry in the US.
It has 14 brands including Chix Chicken, Mean Gene's Burgers and Joey Pagoda's Oriental Express.
Many of its products are based on the same part-cooked bread technology that underlies the Cuisine de France range. Orion has strong links to Drayton Enterprises, a Fargo, North Dakota, based producer of doughs and breads similar to the Cuisine de France range.
Established in 1983, Orion has 1,500 outlets, almost all in the US and also sells to the food service industry targeting hospitals, universities and the military.
The most recent figures available show that Orion had sales of $102 million (€114 million) in the year to May compared to $95 million in the previous year. The group employs 750 people and has a net worth of $20 million.
It is a subsidiary of Schwan's Sales Enterprises, a Marshall, Minnesota, based food company with a turnover of €3 billion. IAWS bought Cuisine de France in 1997 for £51 million and took the brand to the US in May last year. It has spent $1 million developing the American business, which now distributes to 200 outlets in Chicago.
In September, Mr Lynch said the US roll-out was going surprisingly well: "We want to perfect the business first in Chicago and then look at opportunities elsewhere."
He identified large multi-ethnic cities such as New York, Boston and Detroit as areas for expansion.
Further growth in the US is seen as a must if Mr Lynch is to reach his objective of drawing 70 per cent of revenue from food products. At present food accounts for around 40 per cent of the group's €982 million in sales and 50 per cent of its €50 million profits.
This year IAWS bought the Pierre's hot snacks business for €26 million from Green Isle and last year acquired Delice de France, a British group that provides breads and savouries to the catering and food services industry, for €53 million.
IAWS shares closed at €7.15 last night, up 2.14 per cent.