Israel’s Eshbal Functional Food is poised for another strategic acquisition, having signed a binding letter of intent to purchase Texas-based Gluten Free Nation.
Eshbal announced that it entered into an agreement with Starcall Broadcasting, trading as Gluten Free Nation, on June 27, to acquire the manufacturer of gluten-free sweet and savory bakery products. This diverse lineup includes cookies, cakes, and buns, all distributed through retail and foodservice channels.
This acquisition follows Eshbal’s recent purchase of Swonder Bread in June, which specializes in gluten-free, plant-based sprouted-grain sourdough and vegan breads, based in Israel.
Eshbal described the potential acquisition of Gluten Free Nation as “arm’s length.” This deal will require approval from Canada’s TSX Venture Exchange, where Eshbal was listed in April.
CEO Tomer Bar Meir remarked: “This agreement supports our continued strategy of combining organic growth with strategic acquisitions to accelerate market entry.”
He added, “We’re excited about the potential to integrate Gluten Free Nation’s product line and leverage its customer relationships to further expand Eshbal’s North American presence.”
Eshbal is committed to producing better-for-you gluten-free bakery items using natural ingredients such as teff and chia. Its portfolio also includes vegan, low-carb, and sugar-free products like protein snacks and dietary supplements.
The company owns the Barili brand, which encompasses pita breads, buns, and cookies, as well as the Caragil line of flours and cake mixes. While Eshbal supplies foodservice and retail in Israel, it has recently expanded into North America through its reverse takeover with Canada-based Hakken Capital Corp., enabling its listing on the TSX Venture Exchange.
Eshbal reported that the acquisition of Gluten Free Nation will comprise both cash and its own shares, with additional performance-based payments contingent on future revenue. The final amounts will be established after completing the due diligence process and signing a definitive deal agreement.
In addition, Swonder Bread utilizes a fermentation process to craft its sprouted-grain sourdough. The acquisition included Swonder Bread’s recipes, trademarks, production equipment, and inventory.
Eshbal indicated that the acquired intellectual property could serve as a vital “foundation” for future North American offerings.
Furthermore, the company agreed to pay C$150,000 ($110,361) for the Swonder Bread assets over three years.
Regarding this transaction, CEO Meir stated: “From day one, M&A has been a key part of our strategy – and this transaction represents one of the many steps we intend to take.”
He concluded, “Swonder Bread brings unique and hard-to-develop know-how that fits perfectly with our long-term goals. We see immediate opportunities to grow this business in Israel, and we believe the underlying technology offers exciting potential for future product development in North America as well.”