Kingston provides meat in the sandwich for Cranswick

Hull-based Cranswick said the acquisition will expand its cooked meat production capabilities, diversify its product range and broaden its customer base.

No figure was put on the acquisition, but Kingston had gross assets of £3.7m at the end of January.

Kingston’s vendors Tony Turner and Paul Williams will continue in their roles as managing director and operations director respectively.

Cranswick declined to be drawn on how the acquisition will broaden its customer base, but confirmed that Kingston Foods supplies sandwich bars, bakeries and convenience stores.

It is based in Milton Keynes and employs 62 people. All staff will be kept on and Kingston Foods will keep its name.

The company uses only whole meat products – no formed or re-formed products – and the entire range carries a ‘no added water‘ declaration.

Analyst Darren Shirley, at joint broker Shore Capital, said: “This deal sits well with Cranswick’s existing cooked meat capabili- ties.

“Kingston is primarily servicing ‘quick service restaurants’ and hence the deal is also consistent with Cranswick’s intention to drive foodservice turnover from £60m to £160m in forthcoming years.

“We believe the deal opens up new customers for Cranswick, providing the opportunity for cross selling from the existing product portfolio.”

He said it was good news that the two vendors will remain in their current positions, providing continuity to the business.

“We would also highlight Cranswick has a strong track record of effective integration of acquisitions,” he added.

In the most recently published company accounts in January 2011, Kingston Foods reported group sales of £11.6m and underlying earnings of £500,000, implying an underlying earnings margin of 4.3 per cent.

Mr Shirley said: “We believe recent growth has been strong, both from a sales and profits perspective, and the deal is expected to be modestly earnings enhancing in year one.

“With a long-standing track record of sales, profit and dividend growth, a well invested, industry-leading manufacturing infrastructure, strong cash generation and healthy balance sheet, Cranswick represents a core holding in a small/mid cap consumer portfolio.”

Analyst Nicola Mallard, at Investec Securities, said: “Cranswick has made a small acquisition this morning of Kingston Foods, a cooked meat business based in Milton Keynes.

“The consideration is not revealed but the acquisition is expected to be modestly earnings enhancing.

“The attraction of this business is that it takes the group into a new market as it largely supplies high street retailers and quick service food outlets, which is a modest area for Cranswick presently. The vendors will remain with the business,” she added.

Cranswick’s shares closed up 3.5p yesterday to 818.5p.

Kingston Foods began trading from new purpose-built premises in 2000.

Its 20,000 sq ft factory is accredited to BRC Grade A and Soil Association Organic standards.

Chief to quit after 34 years

Cranswick’s chief executive Bernard Hoggarth is to step down at the company’s annual meeting next month, after 34 years with the group.

He is being replaced by chief operating officer Adam Couch, who has been with the company for over 20 years.

Mr Hoggarth, who will turn 60 this year, will take up a part-time role as a commercial director, working three days a week.

“I’ve been doing it for 34 years full time and now I’m going to spend some time on classic cars, motor-racing, shooting and visiting a nice place we have in France.

“The business is in such great form, we’ve had 20 years of fabulous growth. It’s a good time to reassess my position.”