Genius buys Finsbury’s gluten-free business for £21m

GLUTEN-FREE bakery firm Genius Foods will rise to become “one of the largest food groups in Scotland” after unveiling a “transformational” takeover of Finsbury’s Free From.

Under the £21 million deal announced yesterday, Edinburgh-based Genius will buy the Livwell bakery in Hull and United Central Bakeries (UCB) in Bathgate, where the firm’s breads have been produced under contract.

The company was founded in 2009 by chef Lucinda Bruce-Gardyne, who created the firm’s first bread recipe after her son was diagnosed with coeliac disease.

Her products are now stocked by every major supermarket chain in the UK.

Genius chief executive Roz Cuschieri told The Scotsman: “This deal will take our turnover from £20m a year to £50m a year and will make us one of the largest food groups in Scotland.

“This is good news for jobs. We have 20 staff at present and all the 234 in Bathgate and 80 in Hull will keep their jobs following the takeover.

“Our breads have been baked at Bathgate from the first days of Lucinda’s loaves. We will invest in research and development to turn all of the ideas in Lucinda’s head into products.”

Cuschieri said the deal had been funded by the company’s existing shareholders – who include Bruce-Gardyne, chairman Sir Bill Gammell and non-executive director John Dunsmore – and by bringing on board other private investors.

Banking giant HSBC is also lending the firm £7.5m to complete the takeover.

Aim-quoted Finsbury – which bought Hamilton-based Lightbody Cakes in 2007 – will receive £17.7m in cash upfront and a further £3m on the second anniversary of the deal being completed.

Finsbury employs more than 1,000 people at its Hamilton site, which bakes cakes under the Disney and Thorntons brands.

John Duffy, chief executive of Finsbury, said: “Our decision to focus on our core cake and bread business is the group putting its best foot forward.

“The sale will allow the group to further invest, pay down debt, and take advantage of additional opportunities available to us, with the ultimate goal of driving shareholder value.”

Finsbury bought UCB in 2005 for £2.7m and added Livwell a year later in a £9.6m deal.

The two bakeries – trading as Finsbury’s Free From division, which also made potato scones and yum yums – posted a profit of £600,000 in the year to 30 June after turning over £28.5m, about 14 per cent of the wider group’s revenues.

A spokesman for Genius Foods said that the company did not expect the Office of Fair Trading to investigate the deal. He added: “Post-deal, Genius will only have an estimated 35 per cent of the ‘free from’ bakery market and just 7 per cent of the total ‘free from’ market.”

Following the deal, Genius is expected to have a 60 per cent share of the specific gluten-free bread market in the UK, but only 1 per cent of the much-wider general bread market.