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A bakery that produces more than a million cakes each week has been bought by the son of its chairman.

Buxton Spa Bakery, which manufactures own-label cakes for supermarkets such as Morrisons, Co-op and Tesco, has been bought by managing director Mike Higgins.

The deal has allowed Peter Higgins, who co-established the business in 1992, to retire.

The terms of the deal includes its Holmfield Bakery brand, which it supplies to Aldi, Somerfield, Nisa and Kwik Save along with a variety of other wholesalers and retailers.

Following the successful completion of the deal, the new owner plans to increase sales by 20% in the next 12 months by forming new agreements with major supermarkets as well as developing its products.

The financial terms of the deal have not been disclosed but it was funded by an asset-backed package. This was provided by Lloyds TSB Commercial Finance and was arranged against Buxton’s sales ledger and property.

The package was arranged by senior regional manager Bob Richards, who said this funding not only completes the deal but also supports the new owner’s expansion plans.

“Buxton Spa Bakery is poised for significant growth and this deal gives it the fresh impetus to capture valuable market share,” Richards said. “The facilities we’ve put in place will match the rate and scale of expansion and ensure the business has the working capital required to meet peaks in demand.

“Asset-backed lending is increasingly being used in this type of transaction as it enables privately-owned businesses to transfer ownership without giving up equity.”

Higgins said baking has been in the family for generations and this deal ensures this tradition continues. “The asset-backed lending package developed by Commercial Finance allowed us to fund the deal without taking on debt and without relinquishing equity to a third party.

“We are now implementing a strategy to target further growth in our own-label operations and will to continue to secure opportunities to grow our successful Holmfield Bakery brand,” he added.

Mike Higgins was supported throughout the transaction by his lead adviser Jeff Barber of McInnes Corporate Finance.

“It is very gratifying to be able to structure a deal that allows some family members to realise the worth of their investment, whilst still retaining ownership in the hands of those family members taking the business forward,” Barber said.

He added that it was important that to as well as complete the sale, that the company raised sufficient funds to achieve the managing director’s ambitious expansion plan.

“The restructuring of the shareholding, combined with the additional finance made available, allows the management team to now undertake an aggressive growth strategy, which I am confident they will achieve,” Barber said. “It is reassuring to see that there are still opportunities in the market for well run family businesses such as Buxton Spa.”

Legal services were provided by Richard Capper at Halliwells, while chartered accountant Harrop Marshall provided financial and taxation advice.

Harrop Marshall’s team was led by partner Clive Westbury, who has advised the Higgins family for several years.

Westbury said he had to advise on the most appropriate structure which would allow Peter Higgins to retire while providing the necessary funding for his son to take the company forward. “We look forward to working with Mike on the continued success of the company.”

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