BREAKING NEWS

Agreement to Acquire Manor Farm - the Leading Chicken Processor in Ireland

Scandi Standard AB (publ.) (SCST SS) is pleased to announce that it has entered into an agreement to acquire Manor Farm, the largest chicken processor, and market leader, in the Republic of Ireland (Ireland). The business had net revenues of EUR 164 million and EBITDA of EUR 13 million in 2016. The agreement values Manor Farm at an enterprise value, based on the closing price for the Scandi Standard shares on 26 June 2017, of EUR 94 million. Settlement will be a combination of 6 million Scandi Standard shares (“Consideration Shares”), an earn-out mechanism, cash and the assumption of outstanding interest-bearing debt. Completion of the transaction is subject to customary conditions, including approval of the issuance of the Consideration Shares at an Extraordinary General Meeting of Scandi Standard. The four largest shareholders, representing approximately 29% of Scandi Standard’s share capital, support the transaction.     Transaction rationale Profitable and well-run operations Clear market leader in a market with strong preference for local produce Capable and experienced management team with a strong track record Tangible best practice opportunities identified Significant EPS accretion Attractive EV/EBITDA acquisition multiple Post transaction leverage ratio unchanged Risk diversification through a new geographical presence   About Manor Farm Manor Farm sources and processes approximately 50% of all fresh chicken sold in the Irish retail market and approximately 25% of all chicken consumed in Ireland. The business focuses on fresh products for the retail market, selling to a diversified customer base. The business has its processing plant in Shercock in County Cavan. It has approximately 130 farmers contracted as growers and approximately 43 farmers contracted as breeders. It owns and operates a feed mill, which has revenues of approximately EUR 80 million and produces solely for its contracted growers. In the accounts, feed revenues will be eliminated from Manor Farm’s net revenues. The combined entity generated an EBITDA of EUR 13 million in 2016. Manor Farm employs approximately 850 people. Manor Farm is one of the oldest family businesses in Ireland, tracing its origin to 1775 when the founder, Peter Carton, set up a business in Dublin’s fruit and vegetable markets. Recognising the opportunity for a poultry market, he began trading in all forms of poultry. Since then, the Carton family have continued the business. In 1956, they opened a chicken processing plant in Dublin, introducing modern chicken products to the Irish market, and in 1970 they moved their business to a new custom-built processing plant, which has been expanded and upgraded continually since then. Vincent Carton and Justin Carton are the eighth generation of the family in the business. They succeeded their father, Thomas P. Carton, who was involved in the business for 69 years. Over the past generation, Vincent and Justin and their management team have worked closely with Irish retailers and farmers to create a stable and sustainable supply of Irish produced chicken that meets an increasingly discerning consumer demand.       About the Irish poultry market The dynamics of the Irish poultry processing market are very similar to those in the Nordic markets. The market is well consolidated with three domestic players of scale. Manor Farm has a market share of about 50% for fresh chicken products sold through retail in Ireland. As in Scandi Standard’s existing markets, there is a strong preference for domestic produce in the retail channel, and the fresh segment is well developed. Importers distribute mainly to food service, butchers and industrial segments. The consumer market in Ireland is similar to the Nordic markets in terms of size, population and GDP. Leif Bergvall Hansen, CEO of Scandi Standard, states: “I am enthusiastic about the deal as Manor Farm satisfies all of our acquisition criteria. The company has profitability in line with our existing operations, is well run and is the clear market leader in chicken in the Irish retail market. With its capable and experienced management team, the business can be run with a high degree of autonomy whilst additional steps, which have been identified, can be taken to capture the benefits of best practice. As many of our risks are country specific, the acquisition is also likely to reduce our earnings volatility through diversification.”     ABOUT SCANDI STANDARD AB (publ.) Scandi Standard is the largest producer of chicken-based food products in the Nordic region with leading positions in Sweden, Denmark, Norway and Finland. The company produces, markets and sells ready to eat, chilled and frozen products under the strong brands Kronfågel, Danpo, Den Stolte Hane and Naapurin Maalaiskana.   In 2016 Scandi Standard produced approximately 130 million chickens, had net sales of 6,000 MSEK and 1.700 employees.   In 2014 Scandi Standard was introduced on the Stockholm stock market.   OECD, has forecasted that half of the world's protein intake will come from chicken in the year of 2023. Several trends drive the demand, such as:   Increased health consciousness Superior environmental profile Convenient and easy-made Lower production costs than red meat Scandi Standards strategy for profitable growth is to drive organic growth, increase the cost effectiveness and make strategic acquisitions and partnerships.

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