The deal is being financed by the placing of 8.2 million shares at 32p, to raise pounds 2.6m. It is subject to clawback from existing shareholders on the basis of five new shares for every five held.
La Mexicana was set up as a Business Expansion Scheme company in 1986 by Lourdes Nichols, a Mexican by birth. Its principal products are tortillas, both chips and for main meals, and its operating profits have risen from pounds 94,000 three years ago to pounds 297,000 in the year to January while sales have almost doubled to pounds 1.37m over the same period.
It is the third food purchase by West Trust since February 1992 when it paid pounds 2.5m for Bart Spices. Earlier this year, it bought Veeraswamy's, a curry sauce manufacturer, for pounds 750,000. The group plans to use the distribution networks of these - both of which are suppliers to J Sainsbury - for La Mexicana's products.
The purchase was accompanied by the announcement of a pounds 129,000 profit for the year to March, reversing a pounds 3.2m loss last year, although that was after a pounds 2.9m loss on the disposal of a textiles subsidiary. The textiles businesses remained in loss, although the food businesses made about pounds 400,000 profit before interest and central costs. Earnings were 0.21p a share (50.67p loss) but the dividend was held at 2.5p. The shares closed 4p higher at 41p.Reuse content