Vet supply group in sale of division

VET supplier Animalcare has sold its agricultural division for £3.25m in a deal which will leave the group free to focus on its fast growing pet drugs business.

The agricultural division, which consists of livestock tagging business Ritchey in Masham and Fearing International in Northampton, is being sold to New Zealand firm Tru-Test.

Animalcare, which will be based in York following the disposal, said the new buyer has given the company assurances that no jobs will be lost following the deal.

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Tru-Test is keen to expand the agricultural business which employs 59 people at Ritchey in Masham and 14 at Fearing.

Animalcare's chief executive Stephen Wildridge said this deal was "a win all round".

"It gives Tru-Test a foothold in Europe and it's good for the businesses in Masham and Northampton," he said. "The buyer has guaranteed the jobs, which was one of the most important things for us."

Animalcare will make a decision on its final non-core business, the loss making Travik Chemicals business, in the next week.

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The business, based at Newton Aycliffe, employs eight people.

"It will probably mean job losses if Travik is closed. It's a very small part of the business," said Mr Wildridge.

Mr Wildridge added the group will decide what to do with the proceeds from the sale of the agricultural businesses over the next few weeks.

He said the options include paying down debt, which stands at around 3m, using the cash for an acquisition, a dividend payment or a share buyback.

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"We will know after the board meeting at the end of next week," he said. "We also want to speak to shareholders before we make a decision."

Animalcare decided to sell the agricultural businesses as they are operating in a slow growing segment of the market and both need capital and resources to develop.

"We had to decide whether to invest in those businesses or invest in the Animalcare business," said Mr Wildridge. "It was a simple choice. Animalcare is growing a lot faster and it's got a strategy that's working."

Animalcare's chairman James Lambert said: "With approximately 80 per cent of group profits being generated from the Animalcare veterinary medicines and supplies business, the board has decided on focusing all its resources on optimising the growth of the veterinary business."

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The agricultural businesses focus on the supply of livestock identification and welfare products to agricultural retailers and farmers in the UK and Republic of Ireland.

At June 2009, the agricultural businesses had net assets of 4.83m including fixed assets of 1.08m and stock of 850,000.

In the 12 months to June 2009, the two businesses contributed approximately 570,0000 to operating profits before impairment of goodwill and tax on revenues of 7.12m.

The service contracts of all employees will transfer on completion of the disposal.

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Analysts at Brewin Dolphin said the price achieved for the business was higher than expected.

In July the pet drugs division reported a 20 per cent increase in annual sales. The group is leading the market with innovative new drugs for dogs, cats and other household pets.

A particular success has been a new beef flavoured version of its generic heart drug Benazecare.

Two other new products were recently launched including an antibiotic called Enrocare, which treats a number of species, and a dog epilepsy drug called Phenoleptil. Two new products will be launched next week, an injectable antibiotic and a new pet vaccine.

From out of its livestock roots

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Animalcare traces its roots back to the original company Ritchey, which was established in 1972 in Masham, North Yorkshire as a supplier of livestock identification tags to agricultural merchants.

Following the outbreak of BSE in the 1990s the business grew substantially following the mandatory tagging of cattle, and subsequently sheep.

In 2001 Ritchey acquired Fearing, a supplier of livestock identification tags and other husbandry products.

Before the sale yesterday, Animalcare Group consisted of four separate businesses: Animalcare, Ritchey, Fearing International and Travik Chemicals.

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The Animalcare division develops, markets and sells specialised products to veterinary surgeons and other veterinary professionals.

Ritchey is now a leading independent manufacturer, distributor and supplier of animal husbandry products in the UK, Republic of Ireland and key export markets.

For over 30 years Fearing has supplied a range of agricultural products direct to farmers in the UK. Travik Chemicals manufactures chemical products.