Cantillon: Origin likely to reap a windfall from Continental deal

The fact that Continental Farmers’ Group’s board has “unanimously” backed the €71 million offer for the company from Saudi consortium United Farmers’ Holdings indicates that Origin’s representatives, non-executives Tom O’Mahony (above) and Declan Giblin, support the deal.

Neither director has any direct stake in Continental Farmers, but the company’s last annual report describes them as representing the interests of the group’s biggest stakeholder, Origin, which owns 24.2 per cent.

Taking that stake, chief executive Mark Laird’s 7.1 per cent and the 4.5 per cent held by the wife of another director, Tom O’Connor, it looks like the Saudis already have over 35 per cent in the bag.

Origin originally invested €12 million in Continental Farmers back in 2008.If the Saudi deal goes through, it will be paid just over €17 million at the euro-sterling exchange rate which applied on Thursday, when the group formally announced details of the offer.

The offer is 36 pence, a 50 per cent premium on Wednesday’s closing price, so it seems unlikely that any other shareholders will quibble.

The other big shareholder listed in the last annual report – 2011 – is a Davy crest nominee account with 13.5 per cent, which is worth €9.6 million under the terms of this week’s offer.

Continental Farmers is an interesting idea. It owns farms in Poland and the Ukraine, growing a range of crops including wheat, rape, potatoes and beet, which it sells at a profit on the open market. It expects to harvest 32,000 hectares this year. Basically, it is a farmer, but the business is owned by a company rather than an individual or a family, the ownership model with which most Irish people are familiar.

Given that it is a shareholder in the consortium that it is offering such a generous premium, the Saudi state must think it is a particularly good business.