(Alliance News) - Cake Box Holdings PLC on Wednesday raised GBP7.0 million from a share offer to partially fund its agreement to purchase sweets maker Ambala Foods Ltd.
Cake Box is an Enfield, Middlesex-based retailer of fresh cream celebration cakes.
Shore Capital Stockbrokers Ltd placed 3.9 million new Cake Box shares at 180 pence each. The new shares represent 8.9% of the company's enlarged total.
Cake Box shares were up 1.6% to 193.00p on Wednesday morning in London.
Of the GBP7.0 million gross raised, GBP210,000 came from Cake Box directors, including GBP100,000 from Chief Executive Officer Sukh Chamdal.
Cake Box also is offering up to 111,111 new shares at the same price of 180p to retail investors to raise up to an additional GBP200,000, also run by Shore, via the BookBuild platform.
The remainder of the Amala Foods purchase price will come from a new GBP15 million term loan and existing cash.
Amala Foods has been making manufacturer and retailer of Asian sweets in the UK since 1965. Cake Box noted that Mithai sweets have cultural, religious and social importance in the Asian community.
Ambala operates 22 stores in the UK, as well as a manufacturing facility in Welwyn Garden City. It recorded pretax profit of GBP1.8 million on GBP14.0 million in revenue in financial 2023. Cake Box said it expects the acquisition to be immediately earnings enhancing.
Explaining the acquisition, Cake Box said it has identified at least GBP1 million in efficiency gains from combining Ambala with its own operations.
Turning to its own immediately outlook, Cake Box said it has continued to trade strongly since its interim results announcement in November, with sales up on a year before. In the Christmas and New Years' weeks, sales surpassed GBP4 million in total.
The company said it is confident of meeting market expectations for its financial ending on March 31.
By Tom Waite, Alliance News editor
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Cake Box Holdi. (CBOX)
