IAWS steps into France with acquisition of Groupe Hubert

IAWS has taken its first step into the French market with the €130 million acquisition of Groupe Hubert. The Paris-based company, which develops and distributes bakery products to the food service sector in France, is being bought from its venture capital owner, Apax Partners France.

Under the terms of the deal, IAWS will pay €105 million in cash on completion of the acquisition, while the remaining €25 million will be paid depending on the achievement of agreed profit targets over a five-year period. The consideration will be funded from existing resources.

Groupe Hubert services over 20,000 customers in France, supplying them with par-baked bread and patisserie products through its Coup de Pates brand, the model on which IAWS' Delice de France business was based.

The company reported an operating profit of €10.6 million on turnover of €120 million in the year ended September 30th. Its net assets were valued at €25.6 million at that date, while it had debt of around €7 million. Existing management will remain with the group, IAWS said.

The acquisition brings IAWS' investment in the specialist bakery and confectionery sector to €670 million since it acquired Cuisine de France in 1998.

Following the acquisition, IAWS will supply more than 50,000 outlets in Ireland, Britain, France and North America with bakery and confectionery products. "The acquisition of Groupe Hubert is another key step in the internationalisation of our business in the specialist artisan bakery subset of the food market," IAWS chief executive Mr Owen Killian said.

He said the acquisition would lead to substantial benefits in new product development which the company hoped to capitalise on in its Cuisine de France and Delice de France operations.

The acquisition is expected to be earnings neutral in 2005, but should enhance earnings from 2006 onward. Analysts' estimates for its contribution to earnings range from 2.5 per cent to 5 per cent. Shares in the company closed 33 cent, or nearly 3 per cent, higher at €11.58 last night as the market welcomed the deal.

"The acquisition of Hubert, following on the investment in Hiestand, is another milestone on IAWS' roadmap to build a strong presence in continental Europe, where cultural change is creating good growth opportunity for par-baked goods," Davy Stockbrokers said.

Since its acquisition of Cuisine de France six years ago, IAWS has expanded into the British and North American markets. In the US, it owns La Brea, a leading producer of premium artisan breads with bakeries in Los Angeles and New Jersey. It also has a presence in Canada, where it operates a joint venture bakery facility with Tim Hortons.

Last year, it dipped a toe into the European market with the acquisition of a 22 per cent stake in Hiestand, a Swiss gourmet bakery company.