THE Campbell Bewley Group is in negotiations with family-owned Kylemore about taking over the bakery firm in the next two months. On the basis of the most recent set of accounts filed by Kylemore, it could fetch between £12m to £15m.The synergies between the two firms would be very strong as Campbell Bewley buys in a lot of the confectionery it uses both in its famous Bewleys cafes and its Campbell catering operation.
If there was a takeover, Kylemore could supply these products from its bakeries which have undergone a recent £3.5m investment backed by Forbairt.
Campbell Bewley is continuing to consider a stock market flotation. Industry sources say that while a public listing is still some way off, the Kylemore acquisition would strengthen the company before it went to the market.
Last night, a spokesman for the Campbell Bewley Group confirmed that the company was in discussions with Kylemore ``which may or may not lead to an agreement.''
He added: ``There will be no further comment or statement made by either party until the conclusion of the discussions.''
Kylemore has about 40 shops nationwide and nine restaurants. This includes 16 bakery stores throughout Dublin and an outlet in Derry.
The company is owned by Brian Hogan, who is managing director, and his brother David. David Hogan declined to comment on a possible takeover of the company last night.
Kylemore employs 800 people nationally, including its main bakery at McKee Avenue in Finglas, Dublin. It supplies Quinnsworth, Dunnes, Superquinn, SuperValu and independent retailers.
Accounts from the company records office for the year ending April 1996 show that its turnover rose by £1.8m to £21.5m.
However, the figures revealed a decline in profit margins from 6.7pc in the year ending 1995 to 5.5pc a year later. Pre-tax profit was down from £1.3m in the year ending 1995 to £1.2m, in 1996.
Kylemore has total assets of almost £17m and has had a healthy 10pc return on capital.
The company competes with Cuisine de France in the market for selling par-baked bread (which is partly baked, frozen and distributed to shops where the baking process is finished to produce fresh bread).
Next month, Campbell Bewley Group is to announce results which are expected to show sales of £125m, of which £40m will be in Britain and £17m in the US.
Last month, it paid £3m for two new catering businesses in Britain, which will bring its contract catering operations to about £21m this year.
It now has a 10pc share of the tea market since it launched a drive in 1994 to increase its 2pc share of the competitive market.
The group has a good geographical spread in Britain with offices in Manchester, Newcastle, Cardiff, Birmingham and Newbury. Last August it bought the Boston-based Rebecca's Cafe.
In a move, which was seen as a preparation for a possible flotation, it has retained NCB Stockbrokers, IBI Corporate Finance and Arthur Andersen accountants.
It is carrying out a £5m refurbishment programme to its flagship Grafton Street cafe. Its last set of accounts showed that pre-tax profits jumped by 50pc last year to £2.5m.