2 Oct 2012 14:16
2nd October 2012
Produce Investments plc
("PI" or the "Company")
Acquisition of complementary business
Produce Investments, a vertically integrated leading operator in the fresh potato sector, is pleased to announce that it has completed the acquisition of 100% of the share capital of Rowe Farming Limited ("RF") of (the "Acquisition").
Information on Rowe Farming
Rowe Farming's business is based in Cornwall, in the South West of England and they operate from a number of sites in the area. RF have built a very successful business model over many years growing and supplying predominantly specialist new and salad potatoes, with a particular focus on the high value "first early" part of the season. In addition to potatoes, RF also grow and supply daffodils and daffodil bulbs for both domestic and export markets, including the multiple retail sector in the UK.
In year ending 31 March 2012 RF made an operating profit of £3.1m. The business had net assets of £4.7m as at 31 March 2012.
Consideration
The consideration for the Acquisition comprises a cash payment of £12.3m (the "Cash Consideration") and the issue of 1,818,182 new ordinary shares in PI to the current owner of RF (the "Vendor Shares"). The Cash Consideration is being funded through the Company's existing cash resources and a new bank facility.
Benefits for Produce Investments
This adds a very profitable business to Produce Investments and complements the growth strategy to help diversify both the customer base and the product mix. It will allow the Company to increase the amount of UK crop, thus reducing its reliance on imports in the early summer. There is also a trend in the fresh produce industry to favour those supply chain businesses that have ownership and control of a proportion of the crop and this acquisition will complement the Company's existing own growing operations. PI with its supply chain and commercial expertise is well placed to expand the daffodil business.
Barrie Clapham, Chairman of Produce Investments, commented:
"I am delighted we have been able to purchase such a high quality business. It takes the Company into new sectors and we are both excited and confident about the future earnings potential. This transaction has the full backing of our major institutional shareholder and we look forward to repaying the faith shown in us as we start to deliver on our long term strategy of growing the business through acquisition and diversifying its earnings profile both in terms of its customer base and its product offering. The Directors will continue to seek similarly attractive acquisitions and remain confident in our ability to grow the business substantially over the next few years."
Application will be made for the Vendor Shares to be admitted to trading on AIM and dealings are expected to commence on 31 October 2012. The Vendor Shares will rank pari passu with the existing ordinary shares in issue.
Following the issue of the Vendor Shares, the Company's total issued and voting share capital will comprise of 21,759,981 ordinary shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, securities of the Company.
Produce Investments full year final results for the 53 weeks ended 30 June 2012 are released today, 2nd October 2012.
For further information contact:
Produce Investments plc
Contact: Brian Macdonald, Finance Director
Telephone: 01890 819513
Shore Capital & Corporate Limited (Nomad to PI)
Contact: Stephane Auton/Patrick Castle
Telephone: 020 7408 4062
Hudson Sandler
Contact: Nick Lyon
Telephone: 020 7796 4133
Note to Editors
The Group is a vertically integrated company supplying blue chip customers such as Tesco, Sainsbury and Bakkavör with fresh and processed potatoes.
Website: www.produceinvestments.co.uk