LONDON (Alliance News) - Real Good Food PLC Tuesday said it has bought Lancashire-based cake decorating products supplier Rainbow Dust Colours Ltd, a move it said will create considerable synergies, and enable it to develop new products and drive growth in exports.
The baker and sugar producer said it has acquired the cake decorating business for an initial GBP4 million, with an additional cash consideration of up to GBP3.5 million in the form of an earn-out, based on the gross margin the business achieves in the 12 months following the acquisition.
"There are considerable synergies between Rainbow Dust and RGF's successful baking ingredients business, Renshaw, and the acquisition is expected to bring mutual benefits to the two businesses, particularly in developing new products, driving growth in exports and opening up new sales channels," the company said in a statement.
Rainbow Dust makes coloured edible glitters, dusts, sprinkles and food paints, and is based near Preston in Lancashire. The business posted a pretax profit of GBP1.7 million for the year to end-July, generating revenue of GBP3.3 million.
Real Good Food said the two founding directors of Rainbow Dust, Gary Brown and Carol Brown, will continue to run it as a standalone business within the Real Food Food portfolio.
"This acquisition is the first of a number of initiatives designed to refocus our corporate strategy and deliver increased shareholder value," said Real Good Food's Executive Chairman Pieter Totté.
Real Good Food said it paid for the Rainbow Dust acquisition using its new banking facility.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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