Cranswick gobbles up Crown Chicken

The FTSE 250 firm’s board paid a cash consideration of £40m for the deal, funded from existing bank facilities.

Cranswick’s board described Crown as an integrated poultry producer based in East Anglia, which breeds, rears and processes fresh chicken for supply into a broad customer base across grocery retail, food service, wholesale and manufacturing channels.

It also consists of a milling operation, satisfying all of its own feed requirements as well as supplying other pig and poultry producers in East Anglia.

For the year ended 31 December, revenue for Crown was £83.8m with adjusted EBITDA sitting at £6.6m. Adjusted gross assets at year end were £28.4m. Crown’s workforce totalled 400 across its operations.

Cranswick expected the acquisition to be modestly earnings-enhancing in the current financial year.

"Crown is a well-respected operator in the UK poultry sector and represents an excellent opportunity for Cranswick to continue the development of its UK poultry business, building on the highly successful acquisition of Benson Park, the market leading producer of premium cooked poultry, in October 2014,” said Cranswick chief executive officer Adam Couch.

“This acquisition represents important progress in our long term growth strategy of developing new product channels in both pork and other proteins."

Mill director Nigel Armes and agricultural director Matthew Ward would remain with Crown during the transition to Cranswick. Current chairman of Crown, David Thacker, was retiring from the business as part of the acquisition.

Investec's Nicola Mallard highlighted how the deal would be "modestly earnings enhancing" and bumped up both her 2017 and 2018 estimates for the company's profit before tax (after interest costs) by £4.1m to £71.1m (115,6p) and £73.1m (120.2p), respectively.

She also pointed out how two members of Crown's management team, its Mill and Agricultural directors, would be joining Cranswick.