Jacob Fruitfield, the Tallaght-based food group, has decided not to proceed with the acquisition of Burton's Foods, the UK company that owns the Wagon Wheel and Jammie Dodger brands.
This has left the way clear for Duke Street Capital, a UK private equity group, to tie up a £210 million (€309 million) deal with HM Capital, a private equity group in the US that bought Burton's in late 2000 for £130 million.
Jacob Fruitfield withdrew from the race to acquire Burton's having previously been granted a two-week exclusivity period for due diligence.
The Irish company declined to say why it had pulled out of the bidding but it is understood that issues relating to the company's valuation arose during the due diligence process. Latest accounts for Burton's, the second-largest biscuit maker in the UK, show it earned profits of £4 million on turnover of £287 million in 2005.
The deal is not thought to have been derailed by competition issues. Jacob Fruitfield has about a one-third share of the Irish biscuit market while Burton's has about 3 per cent.
It is understood that Jacob Fruitfield had secured funding from Anglo Irish Bank and Bank of Scotland for the deal, before withdrawing from the process.
Jacob Fruitfield has been highly acquisitive in the past three years and missing out on Burton's will disappoint the company, which is backed by Lioncourt Capital, an investment vehicle for Michael Tunney and David Andrews.
It also missed out last year in the bidding to acquire the Tayto snack-food company from C&C, with Ray Coyle's Largo Foods securing the deal.
Commenting on the Burton's sale process, Jacob Fruitfield chief executive Michael Carey said: "We are disappointed that we didn't complete the deal."
Mr Carey said the company would continue to seek out acquisitions while making its existing businesses more efficient. Jacob Fruitfield is currently seeking to outsource its warehousing activity to a third party. This move would affect about 35 workers at its plant in Belgard Road, Tallaght.
The food group is negotiating with trade unions representing staff about its outsourcing plans. A generous voluntary redundancy package is likely to be offered, with the possibility of some workers transferring to other roles at the Tallaght manufacturing base.
Jacob Fruitfield is also in the process of winding down its operations at an 11-acre site on the Blessington Road in Tallaght. This is likely to be complete by the end of the year. Some staff have been relocated to the Belgard Road plant while others are taking voluntary redundancy.
The company has yet to reveal its plans for the site, which is thought to be worth more than €50 million.
Mr Carey founded the company in July 2004 and initially acquired the Fruitfield business from Nestlé. He later bought W&R Jacob and added the Real Irish Food Company in 2005.
