Glisten £20m target as Benecol owner gears up for expansion

Finnish food group Raisio – best known for its Benecol range that claims to help reduce cholesterol – said the offer for Leeds-based Glisten represented a "first and important step" in its international expansion.

Glisten makes cereal, fruit snack bars and health bars and holds the UK rights to make SunMaid raisins and Weightwatchers products.

The offer has been backed by the UK company's board, but will still need the support of Glisten shareholders.

Glisten's shares closed last night up 54 per cent, a rise of 47p to 133.5p.

Raisio said it will pay 140p a share in cash for Glisten, representing a premium of almost 62 per cent to the firm's closing share price on Tuesday of 86.5p.

The recommended offer is being made by a newly formed company 85 per cent owned by Raisio and 15 per cent by Glisten chief executive Paul Simmonds and finance director Robert Davies.

Glisten, whose brands also include Dormen's nuts and Fruitus fruit snacks, said that without a takeover it may require a fundraising in order to refinance its bank facilities.

Mr Simmonds and Mr Davies will stay on at the company.

The group recently revealed a drop in underlying annual profits in the wake of challenging trading and accounting errors in one of its fruit and cereal businesses.

Raisio said it had no plans to make changes to Glisten's existing sites following the deal.

Glisten employs around 650 people across its Leeds head office and eight manufacturing sites in the UK – at Blackburn, Skegness, North Wales, Newport, Liphook in Hampshire, Swindon, London and Bolton.

Glisten's operations include Halo Foods and Lyme Regis Fine Foods, while it also makes savoury snacks under the Dormen's brand.

Glisten shares have been trading at less than a quarter of the levels seen in 2007, when they fetched more than 400p each at one stage.

Mr Simmonds said: "Glisten has had a good journey on AIM since we founded and listed the business in June 2002 with turnover of 14.3m, but we believe this coming together with Raisio is exactly the right path for the business to take now.

"The fit in terms of ambitions, skills and capabilities is excellent and both parties will bring something to the other, not least in access to market, branding, and product development."

Mr Simmonds will take a 12.8 per cent share, while Mr Davies will hold 2.2 per cent.

Raisio has the option to buy their shares after June 2012.

For Raisio, the deal represents the "first and important step" in its international expansion plans, according to chief executive Matti Rihko.

The group takes its name from its hometown of Raisio in Finland and has positioned itself as a healthy food firm.

Its Benecol range – containing an active ingredient patented by Raisio – is now sold worldwide.

The group has 600 staff in nine countries.

Its sales rose 12 per cent to 32.7m in the five months to November 30.

At the end of October Glisten paid the last deferred consideration payment of 1.25m to the sellers of Dormen Foods.

Group debt following this payment is currently around 27.5m.

In December the group announced it had signed a new 32m three-year banking facility with Barclays. The group said that the facility is committed until December 2012.

Eversheds' Leeds team advised Glisten on the takeover.

Eversheds' corporate partner Robin Skelton said: "This acquisition, which provides a significant premium to shareholders, provides Glisten with further capability to continue to develop its position as one of the leading European food snacking businesses."

Seeing signs of stability

Glisten believes that the year ahead will be challenging across the food industry, but says there are signs of more stability and consumer confidence.

The AIM-listed group makes organic snack bars, confectionery and edible decorations.

It serves a variety of customers including most high street retailers, major food manufacturers and the foodservice sector.

Glisten also exports to more than 20 countries worldwide. Its principal activities include cereal, fruit snack bars and health bars, many of which have a diet-control or sports/energy dimension.

Glisten is also a leader in organic and natural snacks and premium confectionery.

Its brands include 'Fruitus' and 'SunMaid' and it also owns a 50 per cent stake in Skinny Candy, a young branded confectionery business focused on low sugar, low fat confectionery.