16th May 2014 08:10
LONDON (Alliance News) - Produce Investments PLC, the parent company of one of the UK's biggest potato producers, said Friday that it has acquired Jersey Royal Co, one of the country's largest producers of the famous Jersey Royal potato, for GBP15 million.
The company said it was in talks to buy Jersey Royal back in January.
"It takes the company into a very significant sector of the potato market and we are both excited and confident about the future earnings potential," said Chairman Barrie Clapham in a statement.
Produce Investments said it will pay for the acquisition via GBP11.0 million in cash, and 1.6 million in shares, part of which was funded via an oversubscribed share placing, where its raised GBP6.0 million before expenses through the issues of 2.7 million shares at 220 pence each.
Produce Investments shares were up 3.4% at 261.12 pence at the open Friday.
As part of the deal, the company has also entered into a put and call option to acquire Peacock Farm from JR Property Holdings Ltd within three years, for a total fixed consideration of GBP6.35 million. Peacock Farm owns the freehold property of Jersey Royal Company's main pack site in Jersey.
The company expects the acquisition of Jersey Royal to be earnings enhancing from the financial year 2015. Jersey Royal Co also owns Kent-based business Kent Potato Company Ltd, where it grows, packs and supplies retailers in the UK with locally sourced Kent potatoes. In 2013, Jersey Royal Co reported a pretax loss of GBP0.1 million and revenues of GBP31.5 million.
In a separate statement Thursday, Produce Investments said that it will cease operations at its Tern Hill potato-packing facility in Shropshire in August.
In March, the firm said the decision was made into order to increase its operational efficiency, noting that a significant proportion of potatoes that are currently packed at the Tern Hill site are sourced from Scotland and the East of England, so this fits with the business and customer strategy to reduce "food miles."
Produce Investments said Friday that it will transfer volumes to its other two main potato packing sites in the Scottish Borders and Cambridgeshire.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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