Agriculture, food and engineering group Carr’s has announced the disposal of its food division, Carr’s Flour Mills Ltd, to flour milling business Whitworths Holdings Limited (Whitworths) for a gross consideration of £36m.
The net consideration for the deal will be £24.0m after adjustments for working capital and net debt on completion.
The agreement follows an approach from Whitworths to acquire Carr’s Food, with Carr’s then undertaking a review of the group’s three divisions. It decided that it was in the best interests of shareholders to proceed with the disposal and focus on growing its agriculture and engineering divisions.
The sale will see £16m returned to shareholders in the form of a special dividend of 17.54p per share, while the remaining £8.9m provides balance sheet strength and the opportunity to expand the group’s continuing businesses, both through acquisition and organic growth.
Tim Davies, chief executive of Carr’s, said: “At a time of increasing competition and volatility in the flour market, consolidation is essential and inevitable. This acquisition by Whitworths presents a great opportunity for the Food division to continue building on the strong foundations laid over many years.
“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.”
Whitworth Holdings chairman Martin George commented: “The Whitworths Board is delighted with the acquisition of Carr’s Flour Mills from Carr’s Group. Carr’s Flour Mills shares a similar history to Whitworths in that it is a longstanding business, which has received material investment in recent years. The business is a great fit geographically 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. I would like to welcome the employees who join us from Carr’s Flour Mills.”
Whitworths is a family-owned business which includes the flour milling company of Whitworth Brothers, which produces flour from four sites.
In the year ended 29 August 2015, Carr’s Food generated revenues of £80.3m and a profit before tax of £2.4m, representing approximately 19.5% of Carr’s total group revenue and 13.9% of profit before tax.