Zetar

Snack-maker Zetar has gobbled up another acquisition in Irish chocolatier Lir, with a £4m placing at a premium price helping to fund the deal.

Mindful that boxed chocolates is the fastest growing sub sector of the UK chocolate market, Zetar will pay up to £5.7m for the maker of luxury and own-label chocs, its sixth acquisition since floating on AIM three years ago. The deal, with a deferred element linked to profits, is to be funded by a placing with institutional investors at 560p.

Lir – which makes chocolates under its own brand, white-label for supermarkets and under the Baileys liqueur brand – has grown its earnings by a total of 154% in the last three years and is expected to make a material contribution to Zetar's numbers next year. It will complement the group’s existing strength in chocolate and in the long-term provide opportunities for various synergies and cost savings.

The Irish management team, which includes co-founder and Irish politician Senator Mary White, are all remaining on board and group chief executive Ian Blackburn thinks their influence could be useful in expanding into overseas markets, particularly the US.

On existing forecasts for April '08, Zetar, originally recommended by Growth Company Investor at 335p in February 2006, trades on around 13 times forecast annual earnings. Following the deal, house broker Altium upgraded 2009 earnings estimates by 3.6%, which would take the rating below its peers. Add.