IAWS has its roots in the Irish agricultural industry but, over the last 10 years, has been remodelling itself as a producer of high-quality baked and convenience foods. This has primarily been achieved through takeovers with luxury bread maker Cuisine de France and U.S.-based cookie maker Otis Spunkmeyer, two notable recent acquisitions. In addition, the firm has been spinning off its agricultural operations, including a fertilizer and animal feed business.
These acquisitions, along with the growing demand for frozen and part-cooked bakery products, have allowed the firm to double its revenues over the past five years. Frozen baked products are gradually replacing their traditional equivalent. IAWS reports that the market is growing by around 4% a year in North America and Europe and at a faster rate in Asia and the Middle East. Frozen baked products allow supermarkets to offer consumers freshly baked products and create the ambience of a traditional bakery but only require a fraction of the manpower that producing baked goods from scratch requires.
In France, the rise in prominence of frozen baked products has created something of a backlash among traditional bakeries, and a law has been passed mandating that only bread that has not been frozen during any part of production can be labelled as "Tradition." In contrast, the on-site bakeries in most European supermarkets sell bread purchased from a company such as IAWS which sells batches of frozen, pre-shaped dough that is either raw or parbaked.
A merger with Hiestand that operates in the same sector but has little geographic overlap could take IAWS's growth rate to the next level. IAWS generates most of its sales in the U.K., Ireland, France and the U.S., while Hiestand primarily operates in Switzerland and Germany and has a small but growing business in Asia.
Both firms specialize in producing frozen bakery products for retailers, bakeries and the foodservice sector, and the manufacturing overlap should facilitate significant cost synergies. The all-share merger will also leave IAWS with cash reserves to fund further acquisitions.
From the June 23, 2008, Prepared Foods e-Flash