Zetar acquires Lir luxury chocolates

By Charlotte Eyre

- Last updated on GMT

Related tags Fudge Sales Chocolate truffle

UK confectionery firm Zetar today said it is expanding its range of
luxury and premium products thanks to the acquisition of Lir
Chocolates in Ireland.

The company first announced its interest in acquiring new operations in October, after successful trading boosted net sales for the first sixth months of the year up 24 per cent, up to £47m from £38m in 2006.

Zetar said at the time that the board was particularly keen to move further across the UK and Europe Finance director Dale Mullins told ConfectioneryNews.com that the latest acquisition will enhance the group's position in the luxury indulgent sector of the chocolate market, as Lir specialises in premium chocolate boxes, truffles and caramels.

"The move will complement our current premium range - the fruit and nuts dipped in chocolate and yoghurt that are manufactured by our Horsley Hick & Flower division," he said.

Lir also holds the license to sell chocolates containing Bailey's liquor - a popular premium chocolate brand - in Ireland and the UK, as well as Denmark, Iceland and Russia.

"Zetar will seek to build upon the existing trading relationship between Lir and Diageo, owners of the Bailey's brand, and to increase sales of existing Bailey's products," the company said.

The group said it expects to market its Lir products in Europe and the US.

This acquisition is the sixth in the snacks and confectionery market for Zetar, and like the others, was drawn up as an Earn Out agreement.

This involves extra payments, that are not part of the original acquisition cost, being made based on the acquired company's future earnings relative to a level determined by the merger agreement.

Total cost for the acquisition is €8m, comprising an initial consideration of €3.3m in Cash and the issue of 34,202 Zetar shares to Lir, Mullins said.

Once the deal is completed Zetar will hold over 99 per cent of the share capital of the Lir, and has agreed to make further payments to the Irish company depending on its future financial performances, he added.

If Lir meet yearly EBITDA targets (earnings before interest, taxes, depreciation and amortization) up to 2011, Zetar will make additional annual payments totalling €9.5m.

The advantage for Lir is that as well as the initial payment, the company is eligible for further considerations, Mullins said.

Lir's first EBITDA target is 2008 is €1.7m, compared to the €0.54 achieved for the year ending 28 February 2007.

Zetar remains confident however that the luxury chocolates will continue to prove popular with consumers, following the example of "several successful companies are currently operating in the luxury end of the chocolate market."

According to Mintel statistics, the market share of luxury and indulgent confectionery products grew from 16 per cent in 2001 to almost 20 per cent in 2006.

Sales of boxed chocolates have also increased, and now have a 25 per cent share - a quarter of the market, Mintel said.

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