WYNNSTAY GROUP PLC
(“Wynnstay” or “the Group” or “the Company”)
Acquisition of
Humphrey Feeds Ltd and associated business, Humphrey Pullets Ltd
Wynnstay, the agricultural supplies group, is pleased to announce that it has agreed terms to acquire the share capital of Humphrey Feeds Ltd, a manufacturer and supplier of poultry feed to farmers mainly in the South of England. In addition, the Company is acquiring the share capital of an associated business, Humphrey Pullets Ltd, which supplies point-of-lay pullets. The initial consideration for these acquisitions (together “Humphrey” or the “Acquisition”) is £9.5 million in cash at completion.
Highlights
Based in Hampshire, with an 85-year history, Humphrey is a well-established manufacturer and supplier of poultry feed, and point-of-lay pullets, to farmers, mainly in the South of England
- c.109,000 tonnes of poultry feed sold in FY 2021
- c.200 farmer customers
- share of the poultry feed market for free-range laying hens is estimated at c.5%*
share of the organic poultry feed market is c.30%*
- pullet-rearing activity supports the main feed business
Humphrey's poultry feed manufacturing is based at facilities in Twyford in Hampshire, with a facility at Calne in Wiltshire currently unused
- Wynnstay intends to redevelop the Calne site into a modern c.185,000 metric tonne capacity mill, manufacturing both poultry and ruminant feed. Planning permission is already in place
In the year ended 28 February 2021, Humphrey generated combined revenues of £39.51m, and an adjusted profit before tax** of £1.16m. Reported combined profit before tax was £1.63m.
- net assets that transfer at completion are valued at £4.5m***
Initial consideration for the Acquisition of £9.5m in cash at completion. Deferred consideration of up to £2.0m may become payable dependent on the attainment of certain performance targets
In order to fund the Acquisition, the Company is entering into a new £12.5m revolving credit facility
The Board believes this is a highly complementary acquisition:
- is expected to be immediately earnings enhancing
- extends geographic reach
- adds new farmer and supply chain relationships
- increases the Group's poultry feed manufacturing capacity and purchasing power
significantly expands the Group's share of poultry feed market for free-range laying hens, a growth sector
adds organic poultry feed sales (typically premium-margin) facilitates expansion of multi-species feed sales in the South of England
The Acquisition is in line with the Company's current growth strategy:
- maintain a balanced agricultural offering between arable and feed, and
- reviewing opportunities in the Group's markets, and ongoing discussions with a number of potential targets
* Humphrey/ Wynnstay estimates
**Adjusted profit before tax excludes non-continuing activities and costs, one-off items and profits from the disposal of fixed assets
***Subject to consideration adjustment by reference to completion accounts
Gareth Davies, Chief Executive Officer of Wynnstay Group plc, commented:
“This is an excellent acquisition for Wynnstay. Humphrey is a long-established, family-owned business, with an 85-year history, which prides itself on 'advancing poultry performance'. It makes a highly complementary addition to the Group, which will be readily integrated, and is expected to be immediately earnings enhancing.
“Humphrey fulfils multiple acquisition criteria for us. It will significantly extend our trading footprint in the South of England, enlarge our market share of poultry feed, a key target sector for us, increase our feed manufacturing capacity, and bring additional farmer customers.
“Looking further out, with the redevelopment of the Calne manufacturing facility into a ruminant as well as poultry mill, there is scope to drive additional significant long-term trading benefits.”