The company's chief executive, Wolfgang Werle, said last week that Hiestand is in talks with a number of family-owned operations with a view to growing the company's sales to 1bn Swiss francs ( 640m) within the next four years through the acquisition of European businesses.

Hiestand's sales in the last financial year were up 13% at about 288m.

It is thought likely that Hiestand will target companies in Spain and northern Europe, and that it is unlikely to seek acquisitions in France, where IAWS owns local distributor Groupe Herbert. Werle has said he would also be interested in buying operations in Russia and Eastern Europe.

Hiestand has been tapping increasing demand from hotel chains, grocers and convenience stores in Europe and Asia for ready-made breads and pastries that can be heated in-store and sold as fresh.

IAWS bought an initial 22% stake in Hiestand more than two years ago for 25m. It recently boosted its stake to 32% at an additional cost of 37m. The Irish company cannot buy any more of the Swiss firm without making a formal takeover offer. Industry insiders suspect that IAWS will attempt to buy the remainder of Hiestand at some stage.

At the end of January, Hiestand reported that fourth quarter sales rose 14% to 75.5m, while IAWS reported sales in the year to July 2005 of 1.4bn, with pre-tax profits of 112m. Werle said last month that Hiestand plans to work more closely with IAWS.

IAWS has extensively expanded its footprint in recent years. It has established a major 225m joint venture with Canadian chain Tim Hortons, having constructed a factory in Ontario to produce doughnuts and other products for the North American company, owned by fast food operator Wendys.

The facility also produces Cuisine de France products for US and Canada.

IAWS chief executive Owen Killian said last year that the company plans to spend about 100m per annum to expand convenience food operations over the medium term.

The company has spent over 700m on building a convenience food business since it acquired the Cuisine de France business in 1997.

IAWS also owns the upmarket La Brea bakery in the US. It recently began selling the products in Ireland and is planning a 50m expansion of a La Brea bakery in New Jersey, while it expects to need an additional La Brea manufacturing facility within two to three years.

IAWS growth in the Irish market has forced the firm to consider moving its 50m plant in Tallaght, south Dublin, to a larger premises.