BWG Foods has acquired Galway-based food distributor Tolan Foodservice for an undisclosed sum.

BWG holds the franchise for Spar in the Republic.

It oversees about 400 outlets of the convenience chain, employing 7,500.

Tolan, established in 1996, specialises in distributing ambient, chilled, fresh and frozen groceries to the food service sector and employs 49.

Management and staff will remain in place.

The company has an annual turnover of more than €20 million and, according to the most recently filed accounts, posted €2.8 million gross profit in 2001.

Mr Conor Whelan, managing director of BWG, said: "We are pleased to have reached agreement with Tolan Foodservice to purchase this business.

"Our strategy is to focus on core areas where we see best synergies and the greatest opportunities for expansion in the context of our own commercial considerations.

"The acquisition of Tolan Foodservice is in keeping with this strategy."

Mr Martin Tolan, managing director of Tolan, said: "We believe that joining forces with BWG Foods will create a bigger and better entity, allowing us to further grow and develop as a major operator in the wholesale food service sector."

Mr John Moane, BWG cash and carry and food service director, said: "The food service sector continues to grow strongly and this purchase is in line with our aggressive food service growth strategy.

"It will ensure that we continue to become a significant and successful player in the food service sector, while at the same time ensuring a better product offering for our customers."

BWG was acquired in a €220 million management buyout (MBO) from Pernod Ricard in 2002, backed by private-equity firm Electra Partners Europe.

BWG Foods reported pre-tax profits of €17.4 million in 2001 on sales of €685.4 million.

More recently, it has reported post-MBO sales of around €500 million.

In May, BWG unveiled plans for a €200 million expansion under which the company will open 100 new stores and create 1,000 jobs by the end of 2005.