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Aga woos urbanites with £30m Fired Earth deal

Susie Mesure
Tuesday 10 July 2001 00:00 BST
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Aga Foodservices Group, maker of Aga cookers, yesterday bought Fired Earth, the interior finishes retail company, for £30m in a deal designed to offer middle-class home-owners a complete lifestyle package.

Aga hopes to benefit from the customer overlap between the brands, which appeal to country home-owners and affluent urbanites alike. Fired Earth, which is best known for its range of hand-fired ceramic tiles and paints, also sells bathrooms, fabrics, wood floorings and tribal rugs.

The acquisition marks Aga's first strategic move since the group, formerly known as Glynwed International, sold its pipe business earlier this year, repositioning itself in the domestic and commercial kitchen equipment market.

William McGrath, Aga's chief executive, said: "Fired Earth was particularly attractive because it has a greater presence in the South-east than us, where historically we have been weak." Until February, none of Aga's 87 stores was within the M25 motorway. Fired Earth has 55 retail outlets, including three larger, out-of-town stores.

"We want to show that Agas are an urban product as well. They are great if you have wellies, but they are also great if you live in Richmond, London," said Mr McGrath.

Aga will pay £23.4m in cash and £6.1m in redeemable loan notes for the ceramic tile maker. About £3.3m are convertible into shares in the food services group at 250p per share.

Mr McGrath said that he was looking forward to adding Aga and Rayburn cookers to Fired Earth's larger, out-of-town stores, and would decide which of the other outlets should also stock Agas. "If you are buying an Aga, you are almost certainly buying tiles as well," he said.

Both companies' catalogues already use each other's products to enhance the attractions of their own. The companies will retain their brand names.

Fraser Allan, Fired Earth's managing director, who owns 5 per cent of the private company, said he was "delighted with the match ... We get the benefits of a larger company's infrastructure as well as the opportunity to expand at a greater pace." Fired Earth's management will join Aga.

Mr McGrath said he hoped other deals would follow. "We could do with a cooker manufacturer and a refrigeration business in the US," he said.

Some analysts questioned Aga's firepower for further acquisitions. One said: "There are some opportunities to sell Agas overseas but most people don't live in such a cold climate as the UK. Agas are very big, very heavy and very, very hot."

Shares in Aga climbed 1p to 251p, valuing the business at £318m.

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