Sweet taste of success for Rainbow Dust

FOUNDING shareholders of Preston-based cake decoration products supplier Rainwbow Dust Colours have hit the jackpot follow its acquisition by the Real Good Food (RGF).

RGF is paying an initial £4m, with an additional cash consideration of up £3.5m in earn-out based on gross margin achieved in the 12 months following completion of the acquisition.

The initial payment has been funded by a new banking facility with Lloyds Bank.

The two founder directors of Rainbow Dust, Gary Brown and Carol Brown, who launched the firm in 2008 with a staff of three, will join RGF and continue to run it as a standalone business within the RGF portfolio.

It employs 30 people and operates out of a 20,000 sq ft site in Lostock Hall near Preston. For the 12 months to July 31 2014, the specialist supplier of cake decorating products to the sugarcraft industry reported a turnover of £3.3m and achieved a trading profit before tax of £1.7m.

The acquisition is expected to bring mutual benefits to the two businesses, particularly in developing new products, driving growth in exports and opening up new sales channels.

RGF executive chairman Pieter Totte said: “The increasing popularity of cake decoration has become a global phenomenon.

“We are excited by the growth prospects which this market offers and we will look to build on the knowledge and expertise which both Renshaw and Rainbow Dust possess to become a world leader in the sector.”

Paul Johnson and Liam Freeman from law firm Irwin Mitchell acted for Rainbow Dust Colours in the sale.