Finsbury Food Group, which manufactures cake, bread and bakery goods, has sold its Free From business in order to focus on its core cake and bread businesses.
The business, which consists of two subsidiaries, was sold to Genius Foods for around £21m on a debt-free, cash-free basis.
The group said the sale will transform its balance sheet, with a cash balance of around £17.7m paid to it on completion of the transaction, and a further £3.0m to be paid on the second anniversary of completion.
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"This will allow Finsbury to focus on growing its cake and bread businesses, to further develop its licensed brand portfolio, and to take advantage of the right bolt on acquisitions to drive longer term value as opportunities and circumstance allow," it said.
The company will also use the consideration to pay down its outstanding debts.
John Duffy, the Chief Executive of Finsbury, said: "We believe that our decision to focus on our core Cake and Bread business is the group putting its best foot forward. The sale will allow the group to further invest, pay down debt, and take advantage of additional opportunities available to us, with the ultimate goal of driving shareholder value."
The share price rose 17.24% to 51p by 14:35 Thursday.
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