IAWS spends €449m on US baked goods company

Food company IAWS has announced the signing of an agreement to acquire US specialty baked goods business Otis Spunkmeyer Holdings from private equity firm Code Hennessy & Simmons and the management team of Otis Spunkmeyer.

Based on a closing enterprise value of $561m (€449m), the consideration for the equity is circa $340m (€272m) with an additional payment to stock and option holders contingent on the achievement of agreed performance milestones, up to a maximum of $25m (€20m). The acquisition is being funded by additional debt facilities.

Otis Spunkmeyer has a coast-to-coast supply chain to its 62,000 customers, offering direct delivery through 52 nationwide sales centres.

In addition to supplying prepared products for fresh baking, Otis also sells ovens, display cases and point-of-sale material. Otis has more than 55,000 ovens in use throughout the USA in both food service and retail outlets.

Otis generated revenue of $336m (€269m) for the year ended 31 December 2005.

"It is expected that the acquisition will be earnings enhancing for IAWS from the date of completion, which is scheduled for the end of October, 2006," Cuisine de France-owner IAWS said today.