Zetar pays up to €8m for Lir Chocolates

Navan-based Lir Chocolates has been acquired for up to €8 million by Zetar plc, a UK publicly quoted holding food group.

Lir's shareholders, including Fianna Fáil Senator Mary White, will receive €3 million in cash upfront and a deferred payment of €4.7 million paid over the next four years if it meets certain profit targets.

It is understood that Enterprise Ireland will receive €500,000 from the initial cash sum as payment for preference shares it owns in the Irish group.

Lir's managing director Stephen Cope and commercial director Hugh O'Brien will also get 34,202 new ordinary shares in Zetar, which are valued at about €300,000. Zetar raised £4 million to fund the deal.

Lir, which makes premium-end chocolates in Meath, will be merged into the UK confectionary company Kinnerton, a subsidiary of Zetar.

Kinnerton already handles Lir's sales and marketing activities in the UK. It also holds a licence to produce chocolate based around a number of children's characters, including Barbie and Rupert Bear.

Lir was founded in 1987 by Senator Mary White and Connie Doody. Mr Cope and Mr O'Brien bought into the business in 2000. The quartet own 92 per cent of Lir with the balance held by other investors.

In the year to the end of February 28th, 2007, Lir achieved sales of €8.5 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of €540,000.

Lir's owners will receive €1.7 million next May if it achieves EBITDA of €1.3 million in the current year.

All four directors will remain with Lir and it will continue to operate from Navan, where it employs more than 100 staff.

Mr Cope said the deal would allow it expand its sales in the UK and into continental Europe. "This deal will enable us to grow as a business," he said.

Mr Cope said Lir expected to achieve sales in the UK in the current year of €7.5 million. "Our plan is to double that over the next five years," he said.

Lir is licensed by drinks group Diageo to use Baileys liqueur in its adult chocolates in the UK, Russia, Denmark and Benelux countries. The deal does not include Lir Café, a franchise operation with outlets in Killarney in Kerry and Carrigaline in Cork.

Zetar was listed on the Alternative Investment Market in January 2005. It has a portfolio of snack and confectionary brands. Lir will be its sixth acquisition.

Zetar's sales rose by 64 per cent to £94.9 million in the year to the end of April 2007 while its pre-tax profit increased by 69 per cent to £6.6 million.

Zetar's chief executive Ian Blackburn said it will invest more than £1 million over the next three years to expand Lir's manufacturing capacity and to extend its warehousing.

"We are ready now to take Lir to the next stage," he said, adding that Enterprise Ireland has agreed to back its growth plans.

"This gives us a presence in the boxed chocolates market," Mr Blackburn said.