Origin Enterprises buys UK fertiliser company for £19m

ORIGIN ENTERPRISES has acquired UK fertiliser company CM Fertilisers for £19 million (€21.5 million). Origin is also assuming just under £6 million (€6.7 million) in working capital-related debt as part of the deal.

CM Fertilisers is owned by Carrs Milling Industries, and operates mainly in Scotland and the north of England.

The sale, which must be approved by Carrs Milling shareholders at a meeting next month, is expected to be completed shortly.

The purchase is to be funded by existing bank facilities, the company said.

CM Fertilisers is engaged in blending raw fertiliser materials into finished product which it then sells on to merchants, agents and directly to farmers.

In the year to the end of August 2010, CM Fertilisers had turnover of £59.3 million (€67.1 million) and earnings before interest and tax of £1.9 million (€2.2 million).

The acquisition is the latest in a number of bolt-on acquisitions of UK-based companies this year by Origin Enterprises, which has an active acquisition strategy.

In March, Origin announced that it had acquired two British companies, United Agri Products and service provider Rigby Taylor.

The company, which is majority owned by listed foods group Aryzta, this month reported revenues of €939.3 million for the first nine months of the year, compared to €816.6 million last year.

Commenting on the CM Fertilisers acquisition, NCB Stockbrokers said that it expected synergies to be achieved by the deal through better purchasing agreements and some opportunities for cross-selling.

The acquisition will give Origin a 23 per cent share of the total UK fertiliser market, according to Goodbody Stockbrokers.

Origin is already a leading supplier of blended fertiliser in the UK through its subsidiary Origin Fertilisers (UK) Ltd.

Carrs Fertilisers chief executive Chris Holmes said the sale of the company removed a “large exposure to commodity price fluctuations, which should reduce the volatility of Carrs’ profits”.

He added that the disposal would also strengthen the balance sheet of Carrs with the net cash placed on deposit, allowing the company to seek further acquisition.

Origin Enterprises said the operations of Carrs would strongly support Origin’s existing position in the UK.

Origin’s share price closed flat yesterday at €3.75.