IAWS takes stake in French fertiliser firm

AGRIBUSINESS group IAWS has made its first move into continental Europe with a £6.7 million investment for 45 per cent of a French fertiliser manufacturer.

IAWS has taken the stake in Group IKEM, which is the fourth biggest company in the French compound fertiliser industry.

IKEM is the holding company for two subsidiaries, Cedest Engrais and Sud Fertilisants. Cedest has 15 per cent of the French market in compound fertilisers and has eight production plants, five in northern France, two in the south and one in central France.

The acquisition of the 45 per cent stake values IKEM at £14.9 million - a multiple of 8.3 times the attributable profits of £1.8 million. Net assets total £12.2 million.

IAWS finance director Mr David Martin said IAWS had been courting IKEM for a long time, adding: "I see this as a strategic move of huge importance for the company." Asked whether IAWS has an option to buy out the remaining 55 per cent of IKEM, Mr Martin said "That's a matter for another day."

"We're happy with a minority position, it's a new market for us. We're very happy that the management is staying on and this gives us an opportunity to get to know the continent at minimal risk. We hope that this will be the platform for further expansion, in the European fertiliser industry, and hopefully do in the continent what we did in the UK fertiliser industry."

IKEM is controlled by Jean Louis Beckwith, who will remain as chairman and managing director. Two IAWS directors will join the IKEM board.

France has one of the biggest fertiliser markets in Europe with annual tonnage of 12 million tonnes, 5 million of which is the compound fertilisers in which IAWS specialises and in which IKEM has a 15 per cent market share. Mr Martin said IKEM is probably fourth biggest in the compound market and added "It's a lovely size to develop from".

He said that the distribution of the production plants in northern, central and southern France means that IKEM is able to service the arable, grass and wine markets. In the cereal market alone, France accounts for 30 per cent of, European output.