Carr's Group plc
(“Carr's”, or the “Company” and, together with its subsidiaries, the “Group”)
Disposal of interests in Agricultural Supplies Division
Streamlined focus on being an international leader in manufacturing value added products and solutions in Speciality Agriculture and Engineering
In line with the strategic review announced on 18 January 2022 to grow shareholder value, Carr's (CARR.L), the Agriculture and Engineering Group, is pleased to announce that it has entered into a conditional agreement to dispose of its interests in the Carr's Billington Agriculture business (the “Agricultural Supplies Division”) to Edward Billington and Son Limited (the “Purchaser”) for an aggregate consideration of up to £44.5 million (the “Disposal”).
The Disposal will enable the Group to focus on its Speciality Agriculture and Engineering Divisions, both of which provide a greater opportunity for growth and historically have achieved higher profit margins.
A circular convening a general meeting of the Company (the “General Meeting” ) to consider and approve the Disposal (the “Circular” ) is expected to be published later today and posted to shareholders tomorrow. The Circular, when published, will be made available on the Group's website ( www.carrsgroup.com ). It will also be submitted to the National Storage Mechanism where it will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Highlights
- Streamlining of the business, enabling resources and investments to be focused on the Speciality Agriculture and Engineering Divisions, principally because these divisions:
o Have recognised market-leading brands and supply an international customer base which, combined with the anticipated market progression for each business, gives greater opportunity for growth;
o Deliver products and services that are differentiated from their respective competitors with scope for development and extension in the future; and
o Have consistently achieved higher profit margins and have the potential for better returns on capital employed
- Conditional agreement to dispose of Agricultural Supplies Division for an aggregate consideration of up to £44.5 million, on a cash-free, debt-free basis and subject to customary adjustments, producing an implied sale multiple of 6.4 times 2021 adjusted EBITDA
- Expected net cash proceeds of approximately £29.6 million with the Group expected to be in net cash position upon Completion
- Net proceeds to target enhanced shareholder returns by funding growth initiatives over the next three years, including:
o Supporting international growth in the Speciality Agriculture Division through investments of approximately £10 million in manufacturing capacity and plant upgrades;
o Funding carefully targeted acquisitions in the Speciality Agriculture Division;
o Providing approximately £4 million of additional liquidity to the Engineering Division to fund potential new larger and longer-term customer contracts; and
o Furthermore, following Completion, the Board intends to determine the benefits for shareholders of arranging a full buy-out of the Group defined benefit pension scheme for approximately £4 million
Commenting on today's announcement, Peter Page, Executive Chairman, said:
“We are today setting out a clear strategy for growth in earnings and shareholder value. This proposed transaction will enable Carr's to focus on its Speciality Agriculture and Engineering Divisions and provide funding for strategic growth and investment, thereby enabling us to build upon our industry-leading positions in these two higher margin divisions.
The Agricultural Supplies Division, trading as Carr's Billington Agriculture, has been a key part of the Group's growth and development over the past 20 years. Following the strategic review, the Board is confident that now is the right time for a single owner and management team to take the business forward. We are confident that Edward Billington and Son, with its long-term commitment to the sector, is well placed to fulfil this role.
This Transaction represents a compelling and immediate realisation of value for all of our shareholders , streamlines the business and provides the Board with a clear strategic direction for driving future growth. We look forward to updating on further progress in due course.”