Hull-based Cranswick has acquired the issued share capital of Benson Park for an undisclosed sum.
Benson Park makes a range of cooked chicken and turkey products for the food industry. Its products can be found in sandwich fillings, pre-prepared salads, and ready meals. Benson Park operates from a purpose-built facility in Hull and employs around 90 staff.
It achieved revenues of £41.1m in the year to August 31. In a statement, Cranswick, which now employs around 2,800 people in Hull, said: “This strategic acquisition moves Cranswick into a new protein sector; broadening both the group’s product range and its customer base.”
The transaction will be funded from Cranswick’s existing debt facilities and is expected to be “modestly earnings enhancing” in the current financial year.
Adam Couch, Cranswick’s chief executive, said: “A key component of the group’s long-term growth strategy is to develop new product channels in its core UK market both in pork and other proteins.
“Today’s announcement represents important progress in that objective.
“This strategic investment moves Cranswick firmly into a new protein category with a well-invested business that has a strong presence, supplying premium poultry products, in the fast growing ‘food to go’ sector.”
Mr Couch said that the fact Benson Park was based in Hull was a huge advantage, because it meant Cranswick already knew a lot about the business.
He believes Hull’s successful bid to become the UK’s City of Culture in 2017 has raised the city’s profile.
Mr Couch added: “For the first time, I can see Hull elevating itself into being a real ‘go to’ place.”
David Park, the managing director, will remain with Benson Park, following the acquisition.
John Hamer and Jon Healey, from the corporate department at law firm Walker Morris, advised the sellers, while Rollitts acted for Cranswick. Cranswick processes and supplies fresh pork, sausage, bacon, cooked meats, charcuterie, pastry products and sandwiches.
These products are supplied into the UK food retail, food service and food manufacturing sectors. In the year to March 31 2014, Cranswick achieved revenues of £995m, and profit before tax of £54.8m.
In a note, analysts from Peel Hunt said: “The acquisition is nicely earnings enhancing, adds a new growth area to Cranswick’s business and brings a business with capacity to expand and attractive margins. It also looks low risk, given the proximity to existing operations and management’s knowledge of the business. We have increased our target price to 1250p to reflect the additional earnings.”
Earlier this month, Cranswick predicted strong Christmas trading and revealed that it had already started production on festive favourites.