2 Sisters signs new partnership with Yorkshire butchers chain
Rotherham-based Crawshaw will take surplus chicken and other meat produced by Mr Boparan’s 2 Sisters Food Group and sell it in its shops.
But Crawshaw’s shares closed down 16 per cent at 25.5p following the announcement as it emerged that Mr Boparan will pay just 15.2p per share for a 29.9 per cent stake in Crawshaw - half the price of Crawshaw’s closing share price of 30.2p on Tuesday.
Crawshaw said the price reflected its share price at the time the deal was hammered out last month.
Investors are expected to support the deal as Mr Boparan’s time and investment is seen as a major benefit for Crawshaw, which has been struggling.
Mr Boparan is expected to invest £5.1m for a 29.9 per cent stake in Crawshaw, with a warrant to acquire a further 20.1 per cent. He will also become an adviser to the board.
Crawshaw, which has 49 stores at the moment, will open dozens of factory shops to sell the excess produced by 2 Sisters, which is one of Europe’s largest meat and food producers.
The deal is subject to Crawshaw shareholder and Takeover Panel approvals.
Crawshaw said that customers will benefit from an expanded range of quality meat at competitive prices.
At the moment 2 Sisters produces more than its customers, such as Marks & Spencer, Tesco and Aldi, actually need so it can always meet sudden demand from a key client.
Typically a retailer might line up a barbecue weekend promotion but if the weather turns bad on the Thursday, the order is cancelled or scaled back leaving 2 Sisters with excess food. This will now be sold in Crawshaw butchers’ stores. Crawshaw will also sell meat, such as chicken breasts, that are deemed to small or too big for retailers’ packs.
Mr Boparan plans to buy a further 20.1 per cent stake in Crawshaw next year, also at 15.2p per share, to take his shareholding to 50 per cent. This second deal can only take place if Crawshaw’s share price rises above 40p.
Mr Boparan said: “This is a great opportunity that complements our corporate social responsibility policy and our aim to reduce levels of quality food that would otherwise go to waste.
“Our businesses have a significant number of opportunities to work through together in the coming weeks and months.”
Following the deal, Crawshaw’s non-executive chairman Richard Rose will retire from the board. He will be replaced by Jim McCarthy who has more than 40 years of retail experience and was CEO of leading value retailer Poundland for 10 years.
Mr McCarthy said: “I am delighted to be joining Crawshaw Group at such a transformational time for the business. There are clearly significant opportunities for further growth, and together with the 2 Sisters Food Group, we have the ideal partner to create value for both businesses.”
Crawshaw’s chief executive Noel Collett added: “This is a transformational partnership for the Crawshaw Group with a significant opportunity to offer a greater range and better availability to our customers.”
Crawshaw also announced annual results on Wednesday, which showed a 19 per cent increase in turnover to £44.2m in the year to January 29, driven by its store expansion programme.
Like-for-like sales fell 7.3 per cent over the year although they showed improvement in the second half. The group made a statutory loss before tax of £1.4m.