A North American subsidiary of food group IAWS is in the initial stages of a deal that analysts estimate could deliver an extra €20 million a year in sales.
La Brea, the specialist US-based bakery controlled by IAWS, has begun test marketing one of its brands of sandwich bread with the Wendy's restaurant chain.
Wendy's is one of the biggest chains in the US, with about 6,600 outlets. It plans to roll out the La Brea sandwich bread across the chain from April.
NCB analyst Paul Meade speculated yesterday that if the deal is completed successfully, it could boost La Brea's sales by $25 million (€20.7 million) a year. He added that it would lead to a "modest" earnings boost for the group.
An IAWS spokesman confirmed that test marketing was under way, but stressed that the whole process was at an early stage.
"There is no product being sold as yet," he said. "They are test marketing at the moment and it would be premature to put a number on anything."
IAWS invested in La Brea in 2001. It is the leading supplier of quality branded breads in the US. The company is currently adding extra production capacity to its factory in New Jersey and employs about 500 bakers.
IAWS shares gained 10 cent yesterday to close at €13.50. The group's price increased on Tuesday as well, as news filtered through that the La Brea deal with Wendy's was beginning to get off the ground.
It was known that La Brea and the restaurant chain had been in talks about the supply deal for some time.
The move would strengthen links between IAWS and Wendy's.
The Irish company has a joint venture with Canadian baker Tim Hortons, through which it supplies part-baked bread and other products to convenience stores and other outlets throughout North America.
Last month Wendy's told the US Securities and Exchange Commission (SEC) that it planned a $600 million flotation of Tim Hortons.
It will initially offer between 15 per cent and 18 per cent of the company to the public via the New York and Toronto stock exchanges. It plans to hive off the rest of the company over the next nine to 18 months.
Yesterday it emerged that one of its investors, billionaire Nelson Peltz, has called on Wendy's chief executive Jack Schuessler to float off all of Hortons immediately.
The IAWS spokesman said the flotation of Tim Hortons should be positive for the joint venture owned by the two companies.
He said it had achieved a good level of growth since it began trading in 2001, and added that the flotation should help it to build on this.
IAWS is one of the biggest agribusiness, food and ingredients businesses in the Republic.
Its brands include Cuisine de France - called Delice de France in the UK - bakery products, Carrolls Meats and Shamrock Foods. It also has food ingredients, milling and animal feeds businesses. It operates here and in the UK, Europe and North America.
