Cranswick expands poultry business with M&A

Cranswick expands poultry business with M&A

UK meat group Cranswick has acquired integrated poultry company CCL Holdings and its subsidiary Crown Chicken for GBP40m (US$56.5m). 

Crown breeds, rears and processes fresh chicken supplying a "broad customer base" across retail, food service, wholesale and manufacturing channels. The company also operates its own milling operation which satisfies its feed requirements and supplies other pig and poultry produces. 

Crown was owned by the Thacker family. Chairman David Thacker will retire upon closing but mill director Nigel Armes and agricultural director Matthew Ward will continue to work at Cranswick post acquisition. The business employs approximately 400 people across its operations. 

For the year to end-December 2015, revenue for Crown was GBP83.8m and adjusted EBITDA was GBP6.6m.  Adjusted gross assets of Crown totalled GBP28.4m.  The transaction is expected to be "modestly earnings enhancing" in the current financial year, Cranswick said. 

Cranswick has expanded its poultry operations via M&A, including a deal to acquire Benson Park in 2014. CEO Adam Couch said that this latest transaction would enable Cranswick to "continue the development of its UK poultry business". 

"Crown is a well-respected operator in the UK poultry sector... This acquisition represents important progress in our long term growth strategy of developing new product channels in both pork and other proteins," he commented. 

Analysts at Shore Capital said the deal represents a "material step-up" in the scale of Cranswick's UK poultry operations. "We view the acquisition as highly complementary to management's medium to long-term strategy to drive growth through the development of new product channels in both pork and other proteins," the analysts suggested. 

Shore Capital raised its full-year expectations on the back of the deal. "We have raised our EBIT forecast by 7.9% to GBP72.4m reflecting the Crown contribution and a nudge-up to our core growth expectations from c3% to a still conservative 4%," the analysts wrote.