£45m sale ends agriculture group’s 20-year joint venture
Carr’s Group has agreed to sell its 50% stake in its agriculture joint venture for up to £44.5m as it looks to drive more profitable growth in other parts of the business.
The Carlisle-based engineering and agriculture group will exit Carr’s Billington Agriculture business by selling out to its partner, Edward Billington and Son.
The deal follows a strategic review started in January to grow shareholder value in Carr’s, which found the group’s senior management and shared functions were “disproportionately consumed” by running the agriculture sales division.
This was inhibiting its ability to develop opportunities in other parts of the group.
Peter Page, executive chairman of Carr’s Group, said: “We are today setting out a clear strategy for growth in earnings and shareholder value.
“This proposed transaction will enable Carr’s to focus on its Speciality Agriculture and Engineering Divisions and provide funding for strategic growth and investment, thereby enabling us to build upon our industry-leading positions in these two higher margin divisions.”
The deal will see £43m paid in cash, with a further £1.5m contigent on performance this year and next year.
The new owner, Edward Billington and Son, is a Liverpool-based food and agriculture group. It started in Liverpool in 1858 and is now a £300m-turnover business operating under the Billington, Criddle & Co, and English Provender Company brands.
Carr’s Billington Agriculture was formed in 1999 and has two divisions, sales and operations, which generates annual sales of £300m and in the last three years pre-tax profits of £4-5m.
Agriculture Sales, based in Carlisle, is responsible for 70% of the division’s revenues from its 32 stores around the UK and the sales of feeds direct to farms.
Agriculture Operations is headquartered in Lancaster and focuses on raw materials purchasing, feed milling assets and distribution.
Carr’s will now focus on its Speciality Agriculture and Engineering Divisions, which it says “provide a greater opportunity for growth and historically have achieved higher profit margins”.
It plans to use the net proceeds of nearly £30m from the sale to fund a £10m investment in manufacturing capacity and plant upgrades, and support planned acquisitions for its speciality agriculture division, and provide £4m of liquidity in its engineering division.
It will also consider a £4m buy-out of the group’s defined benefit pension scheme.
Page added: “Carr’s Billington Agriculture has been a key part of the group’s growth and development over the past 20 years.
“Following the strategic review, the board is confident that now is the right time for a single owner and management team to take the business forward.”
The deal is subject to approval by Carr’s shareholders.