KEY POINTS:
SYDNEY - Retail Food Group plans to acquire Brumby's Bakeries Holdings (BBH) for about A$38 million ($43.5 million).
Retail Food is offering BBH shareholders a cash consideration of A$36 million and an A$2 million fully franked dividend payment.
The offer comprises A$2.69 and a fully franked dividend of A10.883c for each BBH share.
Retail Food said the acquisition of the Bendigo Stock Exchange-listed BBH would bring synergy benefits of at least A$1 million a year.
Retail Food has forecast a net profit of A$7.4 million for fiscal 2007 and earnings per share of A10.3c.
BBH has about 280 shareholders and 316 outlets across Australia and New Zealand that are owned and operated by franchisees.
"This is a strategic acquisition which will allow Retail Food to apply its proven expertise in managing franchise systems to another high-profile Australian brand," said Retail Food chairman John Cowley.
BBH chairman Terry O'Dwyer said the majority of the company's board would recommend the offer to shareholders, saying the deal reflected its strong brand and growth opportunities.
"I am confident Retail Food Group will be an excellent fit with Brumby's franchisees and suppliers, given its extensive and successful experience with franchised food operations through its brands Donut King and bb's cafe in Australia and New Zealand," he said.
BBH reported a 21 per cent lift in fiscal 2006 net profit to A$2.08 million.
Retail Food shares rose A4c to A$1.30.
- AAP