Australia’s Pure Foods Tasmania (PFT) has signed a heads of agreement (HOA) to acquire the business and assets of Daly Potato Company.

For this acquisition, Pure Foods has agreed to pay $1.8m, which will be a combination of shares and cash, subject to working capital adjustments.

Under the deal, the company has agreed to fund the acquisition by paying $1.4m worth of shares. This will be escrowed in three equal tranches over a period of three years.

It will also assume nearly $300,000 of Daly’s current debt and pay the family $100,000 in cash on settlement.

Pure Foods Tasmania managing director Michael Cooper said: “As stated in previous updates, meal solutions is a $1bn market in Australia alone, and we also see a large opportunity to support our Asian customers with unique 100% Tasmanian-based meal solutions.”

“This acquisition also brings many synergies including customers, administration and supply chain benefits, as well as a range of new products that will be added to our new online store for our loyal consumers to enjoy.”

Pure Foods has also agreed to make an additional investment in the company to support its product development efforts. The acquisition is part of its Tasmania growth strategy.

Completion of the deal is subject to certain conditions such as final due diligence and Pure Foods entering a potato supply agreement with the Daly farm.

Pure Foods anticipates that the deal would further enhance its products offering portfolio with the addition of new Daly products.

The company plans to launch Daly products this financial year.