Buyout values Carbury at £12.6m

Carbury Mushrooms, the second-biggest mushroom producer in the State, has been sold for £12.6 million (€16 million) to a management group backed by Donegal Creameries and North Connacht Farmers Co-op. Carbury is the number two supplier of mushrooms to the British multiples and its customers include Tesco, Sainsbury, Asda and Geest.

The buyout has been conducted through a new company, Bendory, in which Donegal will invest £4 million for a 40 per cent stake, and NCF £2.6 million for a 26.3 per cent stake. The remaining shares will be divided between Carbury management shareholders, who will hold 25 per cent, with other Carbury management holding 8.7 per cent.

Donegal has an option to buy half the management shareholders' 25 per cent stake for £1.5 million between three and five years after the takeover. Donegal and NCF jointly have an option to acquire the other half after five to seven years for an undisclosed price, while the 8.7 per cent held by other management can be bought out after seven to 14 years at a price to be determined at the time.

Bendory has valued Carbury at £12.6 million - and of this £11.1 million will be paid in cash to the two main shareholders, Mr Pat Walsh and Mr Charles Spencer. Carbury had sales of £41 million and generated after-tax profits of £2.16 million in the 16 months to last September. Annualising these profits indicates that the buyout group is paying just under eight times the after-tax profits for Carbury, a multiple that analysts said is not out of line for a company of this type.

Donegal Creameries chief executive Mr John Keon said the aim is to grow Carbury by acquisition, particularly in the UK.

Donegal also published its annual results and these show strong growth, with pre-tax profits up 24 per cent to £3.1 million (€3.93 million), operating profits up 18 per cent to £2.1 million and turnover up almost 15 per cent to £58.1 million.