Cranswick announces ‘sizzling’ £17.2m acquisition
HULL-based food manufacturer Cranswick has bought rival sausage firm Bowes of Norfolk for £17.2m.
The deal sees the East Yorkshire firm acquire one of Norfolk’s longest standing family owned businesses, which specialises in pig-rearing and pig meat processing.
The arable farming business will be retained by certain members of the Bowes family together with a portfolio of properties.
Cranswick is however to have the acquisition investigated by the Office of Fair Trading.
The competition authority is inviting comment on the proposed acquisition of Bowes’ meat processing division.
The OFT said it would assess whether the deal constituted a merger, and if so, would consider whether it would be “expected to result in a substantial lessening of competition.”
On completion – expected to be within 10 weeks – the pig-rearing business will be sold to a management buyout (MBO) team comprising certain members of the Bowes family and certain members of Bowes’ management. A pig supply agreement will be entered into by both parties on completion.
The net assets of Bowes on completion excluding the arable farming business and after disposal of the pig-rearing activities are expected to amount to £9.6m.
The adjusted profit before interest and tax attributable to the assets being acquired by Cranswick included in the audited accounts of Bowes for the year ended March 29, 2008 amounted to £2.1m on sales of £75.8m and the gross assets of the business at that date were £21.8m.
Cranswick said that Bowes was a significant operator in the pig-meat processing sector and that the acquisition re-inforced its Cranswick’s position in the sector.
“The business will continue as a separate operation within Cranswick with its own management team reporting directly to Adam Couch, the Cranswick main board director responsible for the Group’s fresh pork operations,” it said in a statement.
“We look forward to the 620 employees who work for the pork-processing operation of Bowes joining Cranswick and to working with the MBO team in respect of the supply of pigs to Bowes.”
Last week Cranswick announced that strong sales, new bank facilities and well invested plants have given it plenty of reasons to be cheerful.
It said that 2008 ended on a high with total sales in the fourth quarter 11% higher than the previous year.
Food sales rose by 11% helped by a healthy serving of pork products, which leapt by 23%.
Sales of continental products rose by 22% while bacon climbed by a respectable 15%.
Cranswick said that turnover in its pet division, which accounted for 7% of total company sales in the quarter, was up by 5%.
The company has invested heavily in expanding its pork and continental product lines with £10m being spent acquiring the freehold of the Dellco factory and a factory adjacent to the Lazenby’s site for future sausage manufacturing.
It said that full year results, which will be announced in May, were “likely to be ahead” of market expectations.
