Carr’s Group Sells Flour Milling Business to Whitworths Holdings for £36M
UK-based agriculture, food, and engineering company, Carr’s Group has sold its food division, Flour Mills Ltd., to Whitworths Holdings Ltd. in a deal valued at £36 million (US$48 million). After adjusting for working capital and net debt, the net value of the deal will be £33 million (US$44 million).
Although the division was profitable, Carr’s decided to divest the business due to limited potential for growth in the UK milling industry, leading to a jump of the company’s shares of 10 percent upon the announcement of the sale, according to Agrimoney.
"The sale of Carr's Flour Mills Ltd represents an exciting stage in Carr's strategic development,” said Tim Davies, chief executive of Carr’s as it will align the company to better position itself to become an internationally recognized company across its remaining agricultural and engineering businesses as part of its strategic goals.
Carr’s agricultural and engineering divisions manufacture and supply livestock feed, farm equipment, and provide robotic and remote handling equipment to 35 countries, and includes a network of retail sites across the UK.
"We will continue to focus on our strategy of delivering growth in our UK agriculture business, the development of our international feed supplement businesses and building our specialist engineering division in niche markets across the globe,” said Davies.
Carr’s milling facilities are located in Cumbria, Essex, and Fife in the UK and in Kirkcaldy in Scotland’s east coast, where the company mills wheat imported from across Europe, Canada, and the U.S. for supply to bakeries and food manufacturers according to World Grain. Last year the company saw revenue of £80.3 million (US$107.8 million) and profits of £3.1 million (US$4.1 million).
“The business is a great fit geographically,” said Martin George, Chairman of Whitworths Holdings Limited, “…and will give us access to the South East, North of England and Scottish markets that would otherwise not be available, and means we have national reach.”
As a result of the sale, Carr’s will now be able to return £16 million (US$21.5 million) to investors through a special dividend of 17.54 pence per share – the remaining £8.9 million (US$11.95 million) will be allocated to strengthening the business’ balance sheet by funding growth and future acquisitions.
“At a time of increasing competition and volatility in the flour market, consolidation is essential and inevitable,” said Davies. “This acquisition by Whitworths presents a great opportunity for the Food division to continue building on the strong foundations laid over many years.”