Acquisition

RNS Number : 9575F

Wynnstay Group PLC

05 May 2011

 



AIM: WYN

WYNNSTAY GROUP PLC

("Wynnstay" or "the Group")

Acquisition of Wrekin Grain Ltd

The Board of Wynnstay, the agricultural and retail group, is delighted to announce that it has acquired Wrekin Grain Limited ("Wrekin"), a leading independent grain marketing and agricultural inputs supplier, based in Telford, Shropshire, for an anticipated net consideration of £4.0m, after taking into account the utilisation of surplus cash in the acquired business. Of the net consideration, £3.0m is payable in cash on completion and a further consideration, up to a maximum of £1.0m, may also be payable, based on a formula to be applied to future profits. The acquisition more than doubles Wynnstay's existing grain marketing volumes and further extends the Group's geographic trading area and farming customer base. 

For the year ended 31 March 2010, Wrekin generated revenues of £33.87m and operating profits of £0.66m. Its net assets at completion (excluding surplus cash of approximately £1.0m) are expected to amount to £0.40m. Wrekin provides comprehensive grain marketing services throughout the Midlands region and also supplies a full range of seeds and fertilisers to its customer base. Its addition significantly increases Wynnstay's profile in the national arable marketplace and in grain trading in particular. The acquisition follows Wynnstay's major expansion in the seeds sector last year, with the purchase of Woodheads Seeds establishing Wynnstay as a national presence in seeds supplies.

Wynnstay intends to combine Wrekin with its existing grain trading company, Shropshire Grain Ltd, and to rebrand the enlarged business as 'GrainLink Limited'. The acquired activities will be relocated to the Group's arable operations at Astley in Shrewsbury. The existing management team at Wrekin will join the Group, managing Wrekin's integration within Wynnstay and developing the expected cross-selling opportunities. 

Taking into account anticipated surplus cash acquired of £1.0m, the total gross cash consideration of up to £5.0m will be payable as to £3.0m in cash on completion, a surplus cash payment estimated at £1.0m before May 2012 and a contingent consideration up to a maximum of £1.0m payable, based on a formula to be applied to the profit before tax of GrainLink Limited for the four financial years ending 31 October 2015.  Any deferred consideration would be payable in cash in annual instalments. The initial consideration of £3.0m has been paid in cash, funded by a new bank borrowing facility repayable in equal monthly instalments over five years carrying an interest rate of 2% over base rate.

The Directors expect to announce Wynnstay's half year results for the six months ended 30 April 2011, on 22 June 2011.

Ken Greetham, Chief Executive of Wynnstay, said,

"Wrekin has established a strong reputation for its market knowledge and high service standards and I am delighted to have agreed its acquisition. We believe that the integration of the business with our current grain activities will provide sufficient scale to enable the combined team to create a business with a national presence in the UK grain market. We look forward to working with the Wrekin team to build the business."

Enquiries:

Wynnstay Group plc	Ken Greetham, Chief Executive	T: 01691 828512
	Paul Roberts, Finance Director
Biddicks	Katie Tzouliadis	T: 020 3178 6378
	Sophie Lane
WH Ireland Limited (Nomad & Joint Broker)	Robin Gwyn Stuart Forshaw	T: 0161 832 2174
Shore Capital (Joint Broker)	Andrew Raca	T: 020 7408 4090

 

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