DONEGAL Creameries, the Letterkenny co-op which floated on the stockmarket just over a year ago, yesterday announced it had acquired 76pc of Donegal confectioners William McKinney for £783,750.DONEGAL Creameries, the Letterkenny co-op which floated on the stockmarket just over a year ago, yesterday announced it had acquired 76pc of Donegal confectioners William McKinney for £783,750.
The family-owned McKinney, also based in Letterkenny, makes a number of well-known sweet brands inlcuding Emerald Toffees, Colleen and Oatfield Eclairs.
But it has encountered difficulties recently reporting a pre-tax loss of £447,000 for the year to December 1997. McKinney's balance sheet at December 31, 1997 showed net assets of £1.4 million including bank overdrafts of £0.95 million.
Donegal Creameries managing director John Keon said that while the acquisition did not have any ``immediately apparent synergy,'' there was ``some scope in common distribution and storage.''
He added that he also hoped to sell off some of McKinney's property at ``above book value.''
The initial cash consideration paid by Donegal was £237,500 with further payments due over the next four years.
In addition, Donegal has agreed to make an interest free subordinated loan of £250,000 to McKinney to finance an increase in capital expenditure.
Donegal will also have the first option to acquire the outstanding 24pc of McKinney from the remaining shareholders.
Donegal closed unchanged yesterday at EURO 2.20 (173p).