Morning Mumble: Finsbury Food *(Duncan's view)

Finsbury Foods: NC

Today the Company has acquired the Fletchers Group for approximately £56m. Given that this deal is larger than the current market capitalisation of Finsbury the deal will be structured as a reverse take-over, and the deal is being paid for by cash with Finsbury placing a shy 60m new shares at 59p. This placing looks to be over-subscribed, sensible given the strategic sense of the deal. Finsbury have spent much of the last few years investing behind their Cake business in the UK so that they now have excellent facilities that can service the Retail market, it looks as though Fletchers has been investing behind their business of morning goods and bread for the Food Service industry. Now the combined business should be able to harness the potential of selling complimentary products to their existing clients, consequently you should see the s=combined sales rise faster than they could have achieved if they had both stayed independent. It looks as though there is one other nice issue in the deal, Fletchers has some tax losses which will be useful too. As a category, the baking, bread and cake industry has been suffering from a lack of investment, it feels as though Finsbury has now merged the two companies that were addressing this. With sales likely to approach £300m, you should start to see other investors look at the business, especially as there are not many well invested smaller capitalised companies within this space.

(Bold is mine).

Cheers Roger, whom we hope does not go to the excessive of the British Bake Off!

Atb Fraser