Cranswick buys Dunbia’s Ballymena pork business
Operating from a purpose-built facility in County Antrim, Dunbia Ballymena employs 360 people and processes around 7,800 pigs each week.
Sales for pork business were £72.4M for the year to March 29 2016.
The transaction will be funded from Cranswick’s existing debt facilities, and is expected to be earnings neutral in the current financial year and earnings enhancing in 2018.
Dunbia executive director Jack Dobson is to stay on in a consultancy capacity to help with the takeover process.
Greater control over the supply chain
Cranswick ceo Adam Couch said the acquisition strengthened the firm’s UK pork processing business and provided it with greater control over the supply chain.
“It ensures we can maintain the production and processing of high quality, UK farm-assured pigs, which is central to our customers’ requirements,” he said.
Shore Capital analysts Clive Black and Darren Shirley said the acquisition represented “another sensible strategic move” by Cranswick, in adding a complementary pig production region to its core activities in North Yorkshire and Norfolk.
With limited financial details provided in the takeover announcement, Black and Shirley expected “greater clarification” at the forthcoming interim results on November 29.
‘Forecasts unchanged’
They said: “In that respect we leave our sales, profit, cash flow and debt forecasts unchanged ahead of the interim results, though at this stage see the potential for a mid-single digit upgrade to FY2018 on earnings-per-share expectations, and the prospect of a modest net debt position at the 2017 financial year-end (current forecast £5.6M net cash).”
Cranswick’s activities are focused within the UK and include the processing and supply of fresh pork, sausage, bacon, cooked meats, premium fresh and cooked poultry, charcuterie and pastry products.
The firm recorded sales of £1.07bn and profit before tax of £58.7M for the year to March 31 2016.
In July, Cranswick sold its sandwich business – The Sandwich Factory – to Greencore Group for £15M.
The Shore Capital view
“The deal provides both medium-term growth potential and provides Cranswick with greater security of supply of high quality, UK farm assured pigs – good news for Northern Ireland and its rural economy,” said Shore Capital analysts Clive Black and Darren Shirley.
“Cranswick is a world class operator that will bring much needed security and growth to the region's most important industrial sector through this acquisition.
“We would imagine that in due course, the farming community will benefit from ongoing investment in the plant, so contributing to the development of the rural economy, particularly in County Antrim and its environs.”
