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Cranswick focus on food after sale of £17m pets arm
GOURMET sausage maker Cranswick is now focused solely on food after selling its pet division to management for £17m.
The Hull group, which recently bought Norfolk pork company Bowes for 17.2m, has exchanged contracts for the sale of Cranswick Pet Products and Tropical Marine Centre (TMC).
Chief executive of the pet division Derek Black will resign from the board of Cranswick and head the new venture, which is Europe's leading bird feed company.
Cranswick chairman Martin Davey said: "Cranswick is now wholly focused on its food activities and will continue with its strategy to grow both organically and through acquisition."
Senior management at the pet business, including Mr Black and TMC managing director Paul West, took part in the management buyout which was backed by Lloyds TSB.
The Driffield business employs about 250 people, with sites in Hertfordshire, Bristol, Manchester and Lisbon in Portugal.
Cranswick chief executive Bernard Hoggarth said: "We are very much a food company and this allows us to continue to give 100 per cent focus to what's generally accepted as our core activity.
"We have left it in very competent hands. It's also dovetailed very well with a significant acquisition."
Last month Cranswick announced it was buying the meat processing arm of Bowes of Norfolk, a deal which significantly enlarg-es its business with Tesco.
As well as supplying pork for Tesco's Finest, standard and value ranges, Bowes also supplies manufacturers which make hams, pies, sausages and bacon for major retailers and restaurants.
The deal, which is being looked at by competition authorities, is expected to complete in June. "When you look at the business now, when you add on the acquisition of the Bowes business, it has in excess of 700m of sales in food and more than 5,500 employees," said Mr Hoggarth.
The proceeds from the pet sale will be used to reduce group debt from the Bowes acquisition. The pet business had net assets of 17.2m and made profits of 1.9m in the year to the end of March 2008. In 2008 revenues grew 29 per cent to 39.7m with strong pet food and aquatic sales. Cranswick will retain a 5.5 per cent stake.
Mr Black, who joined Cranswick in 1980 and was appointed to the board in 1988, said he had been discussing the management buyout with the board for about a year.
"After 30 years with Cranswick it's something I have always wanted to do," he said. "I believe the business is ripe for future growth.
"We are spreading our wings into mainland Europe and we have opened up new business gains in Kuwait, France and the US."
The company's revamped bird food manufacturing plant in Driffield has capacity to produce about 100,000 tonnes of feed annually. It plans to increase production from the current 60,000 tonnes and will retain its entire workforce as the wild bird feed market grows.
"People want colour and movement in their garden," said Mr Black. "They are prepared to pay for it.
"Our sales have continued to grow year on year. It certainly has not been impacted by the recession."
Brewin Dolphin analyst John Dickinson said: "Cranswick's track record of developing businesses via organic means as well as acquisition has resulted in strong growth for shareholders. Cranswick's cash flow and banking facilities leave the group well placed to take part in any further sector consolidation."
HOW A FOOD EMPIRE GREW
Cranswick was formed in the early 1970s by farmers to manufacture pig feed and soon after-wards began to sell pigs.
In 1988 the company decided to broaden its scope by expanding into food manufacturing to minimise the impact of fluctuating agricultural commodity prices.
It bought a small pork butchery business in 1988, followed in the early 1990s by other food manufacturing acquisitions.
It bought premium sausage manufacturer Lazenby's in 1998 and a year later snapped up Pethick & Co, a high-quality ham manufact-urer.
In 2001 it bought Continental Fine Foods. In 2002 it acquired North Wales Foods and in 2003 it bought The Sandwich Factory. The group further expanded its presence in the cooked meats sector by buying Perkins Chilled Foods in 2005.
The company has also been selling off non-core assets, and in 2007 BOCM Pauls bought its original pig feed business for an undisclosed sum.
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Wednesday 23 May 2012
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