London / UK. (ffg) The boards of Frisbee Bidco Limited and Finsbury Food Group PLC are pleased to announce that they have reached agreement on the terms of a recommended offer to be made by Bidco for the entire issued and to be issued ordinary share capital of Finsbury (other than the Finsbury Shares held by funds managed by DBAY Advisors Limited). The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act between Finsbury and Finsbury Shareholders. Under the terms of the Acquisition, each Scheme Shareholder will be entitled to receive 110 pence in cash per Scheme Share.
Based on the Cash Offer, the Acquisition values the entire issued ordinary share capital of Finsbury at approximately GBP 143.4 million, based on an issued share capital of 130,383,361 Finsbury Shares. The Cash Offer represents a premium of approximately 23.6 percent. to the Closing Price of 89.0 pence on 19 September 2023; 54.9 percent. to the Closing Price of 71.0 pence on 2 September 2022, being the last practicable date prior to the public disclosure of DBAY’s interest in Finsbury; and 22.3 percent to the VWAP of a Finsbury Share of 89.9 pence during the 12 month period ended 19 September 2023.
As an alternative to the Cash Offer, Finsbury Shareholders (other than Finsbury Shareholders resident or located in a Restricted Jurisdiction) may elect to receive a non-voting B ordinary share in Bidco for each Scheme Share held. A Finsbury Shareholder may elect to take up the Alternative Offer in respect of some or all of his, her or its holding of Scheme Shares. The Consideration Shares will be issued within 14 days of the Effective Date. The Consideration Shares are unlisted, non-transferable (except in limited circumstances) and do not carry any voting rights.
Bidco is a limited company registered in the Isle of Man and incorporated on 18 August 2023. Bidco was formed for the purpose of the Acquisition and is an entity ultimately owned by funds managed by DBAY and has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.
DBAY is an asset management company based and regulated on the Isle of Man. It was founded in 2011 and manages a range of funds and co-investment vehicles for endowments, foundations and other institutional investors. DBAY has offices in Douglas and London. DBAY invests predominantly in listed equities, and can also hold unlisted instruments. DBAY supports management teams and assists them in the process of growing their businesses.
Finsbury is a leading UK and European manufacturer of cake and bread bakery goods, supplying a broad range of blue-chip customers within both the grocery retail and ‘out of home eating’ foodservice sectors including major multiples and leading foodservice providers. Finsbury is one of the largest speciality bakery groups in the UK offering a comprehensive product range that includes: (1) large premium and celebration cakes; (2) small snacking cake formats such as cake slices and bites; (3) artisan, healthy lifestyle and organic breads through to rolls, muffins (sweet and savoury) and morning pastries, and (4) gluten free bread, morning goods and cake ranges. Finsbury comprises a core UK Bakery division and an Overseas division that together incorporate manufacturing sites in the UK and Poland, and an 85% equity stake in a French business that supplies and distributes Finsbury’s UK-manufactured products and third-party products in Europe.
Background to and reasons for the Acquisition
DBAY has followed Finsbury’s story for some time, attracted by the business model and strength of the management team, and began acquiring Finsbury Shares in August 2022.
DBAY believes strongly in the future potential of Finsbury but is firmly of the view that, in order to fulfil the growth potential of the business in the medium term, Finsbury needs to supplement its current organic growth with additional growth opportunities, including a meaningful and sustainable acquisition strategy.
DBAY believes that Finsbury’s public listing and the current turbulence in quoted equity markets substantially inhibit its ability to pursue these growth opportunities, in particular acquisitions.
The limited liquidity of Finsbury Shares has led DBAY to conclude that the future prospects of Finsbury and its employees would be better served as a private business, with a supportive majority shareholder and access to additional sources of both equity and debt to fund accelerated and sustainable growth.
DBAY is therefore eager to work with the senior management team in taking the business private, and intends to seek to cancel trading in Finsbury’s shares on AIM as soon as possible in accordance with applicable laws.
Whilst the Cash Offer will provide Finsbury Shareholders who elect for it with immediate liquidity at completion of the Acquisition, DBAY recognises that some shareholders may wish to retain an economic interest in Finsbury. As such, DBAY has made available the Alternative Offer to allow Finsbury Shareholders to continue to hold an equity interest in Finsbury post completion of the Acquisition. Finsbury Shareholders should take their own independent financial, legal and tax advice and consider carefully the disadvantages and advantages of electing for the Alternative Offer (including, but not limited to, those set out in paragraph 12 of this announcement) in the light of their own financial circumstances and investment objectives.
Comments on the Acquisition
Peter Baker, Non-Executive Chairman of Finsbury: «Finsbury has a successful track record under the leadership of the current management team of delivering sustainable, profitable organic growth along with strategic, targeted acquisitions. For the next phase of the Finsbury Group’s development the business will need to pursue strategic, transformational M+A to achieve the scale required to be successful in an increasingly competitive and demanding market place.
«I am confident that Finsbury will thrive under DBAY’s stewardship in the private market, with access to DBAY’s investment and operational support to pursue the current strategy of scaling Finsbury’s buy-and-build M+A in the future.
«The Finsbury Board has carefully reviewed the terms of DBAY’s Cash Offer, and believes it provides shareholders with an accelerated, de-risked opportunity to realise their investment in full and in cash at an attractive premium to both the current share price and the long term weighted average share price.
«As such, the Finsbury Board unanimously intends to recommend that Finsbury Shareholders also vote in favour of the Acquisition.»
Alexander Paiusco, Chief Executive of DBAY: «We are pleased to have reached agreement with the Finsbury Board and that the Acquisition has received a unanimous recommendation. The Cash Offer represents an opportunity for Finsbury Shareholders to realise their investment in cash at a premium to the historical share price of Finsbury and as an alternative to the Cash Offer we have offered Finsbury Shareholders the ability to retain a shareholding in Finsbury going forward through the Alternative Offer.
«We have been supportive shareholders of the business for over a year and have been impressed with the management team during our ownership, but we strongly believe Finsbury would benefit from transformational M+A including international expansion and this would be better achieved in private ownership without the barrier of the current listing. We look forward to working with Finsbury’s management and employees to accelerate Finsbury’s strategy and unlock the long-term value in Finsbury for all stakeholders.»
A quote from John Duffy, Chief Executive Officer of Finsbury Food Group PLC, is missing from the original statement. What is known is that he has opted for the alternative offer in respect of 1,793,401 Finsbury shares beneficially owned by him. This represents approximately 62.5 percent of his total beneficial ownership in Finsbury. His investment in Finsbury is to remain in place. As a result, he is prepared to hold a future unlisted, non-transferable investment.
