TIDMCARR
RNS Number : 7187X
Carr's Group PLC
31 August 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
Carr's Group plc
("Carr's", or the "Company" and, together with its subsidiaries,
the "Group")
Disposal of interests in Agricultural Supplies Division
Streamlined focus on being an international leader in
manufacturing value added products and solutions in Speciality
Agriculture and Engineering
In line with the strategic review announced on 18 January 2022
to grow shareholder value, Carr's (CARR.L), the Agriculture and
Engineering Group, is pleased to announce that it has entered into
a conditional agreement to dispose of its interests in the Carr's
Billington Agriculture business (the "Agricultural Supplies
Division") to Edward Billington and Son Limited (the "Purchaser")
for an aggregate consideration of up to GBP44.5 million (the
"Disposal").
The Disposal will enable the Group to focus on its Speciality
Agriculture and Engineering Divisions, both of which provide a
greater opportunity for growth and historically have achieved
higher profit margins.
A circular convening a general meeting of the Company (the
"General Meeting" ) to consider and approve the Disposal (the
"Circular" ) is expected to be published later today and posted to
shareholders tomorrow. The Circular, when published, will be made
available on the Group's website ( www.carrsgroup.com ). It will
also be submitted to the National Storage Mechanism where it will
be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Highlights
-- Streamlining of the business, enabling resources and
investments to be focused on the Speciality Agriculture and
Engineering Divisions, principally because these divisions:
o Have recognised market-leading brands and supply an
international customer base which, combined with the anticipated
market progression for each business, gives greater opportunity for
growth;
o Deliver products and services that are differentiated from
their respective competitors with scope for development and
extension in the future; and
o Have consistently achieved higher profit margins and have the
potential for better returns on capital employed
-- Conditional agreement to dispose of Agricultural Supplies
Division for an aggregate consideration of up to GBP44.5 million,
on a cash-free, debt-free basis and subject to customary
adjustments, producing an implied sale multiple of 6.4 times 2021
adjusted EBITDA
-- Expected net cash proceeds of approximately GBP29.6 million
with the Group expected to be in net cash position upon
Completion
-- Net proceeds to target enhanced shareholder returns by
funding growth initiatives over the next three years,
including:
o Supporting international growth in the Speciality Agriculture
Division through investments of approximately GBP10 million in
manufacturing capacity and plant upgrades;
o Funding carefully targeted acquisitions in the Speciality
Agriculture Division;
o Providing approximately GBP4 million of additional liquidity
to the Engineering Division to fund potential new larger and
longer-term customer contracts; and
o Furthermore, following Completion, the Board intends to
determine the benefits for shareholders of arranging a full buy-out
of the Group defined benefit pension scheme for approximately GBP4
million
Commenting on today's announcement, Peter Page, Executive
Chairman, said:
"We are today setting out a clear strategy for growth in
earnings and shareholder value. This proposed transaction will
enable Carr's to focus on its Speciality Agriculture and
Engineering Divisions and provide funding for strategic growth and
investment, thereby enabling us to build upon our industry-leading
positions in these two higher margin divisions.
The Agricultural Supplies Division, trading as Carr's Billington
Agriculture, has been a key part of the Group's growth and
development over the past 20 years. Following the strategic review,
the Board is confident that now is the right time for a single
owner and management team to take the business forward. We are
confident that Edward Billington and Son, with its long-term
commitment to the sector, is well placed to fulfil this role.
This Transaction represents a compelling and immediate
realisation of value for all of our shareholders , streamlines the
business and provides the Board with a clear strategic direction
for driving future growth. We look forward to updating on further
progress in due course."
Enquiries:
+44 (0) 1228 554
Carr's Group plc 600
Peter Page (Executive Chairman)
Neil Austin (Chief Financial Officer)
Investec Bank plc (Sponsor and Corporate +44 (0) 20 7597
Broker) 5970
Carlton Nelson / David Anderson / William
Brinkley
+44 (0) 20 7250
Powerscourt (Financial PR) 1446
Nick Dibden / Nick Hayns / Sam Austrums
The person responsible for arranging the release of this
announcement on behalf of the Company is Matthew Ratcliffe, Group
Legal Director and Company Secretary.
About Carr's Group plc
The Group has market leading brands and robust market positions
in Agriculture and Engineering supplying customers in over 50
countries, with manufacturing sites in the UK, Germany and the USA,
managed in three divisions. Carr's operates a decentralised
business model that empowers operating subsidiaries enabling them
to be competitive, agile, and effective in their individual markets
whilst setting overall standards and goals.
Its Speciality Agriculture Division manufactures and supplies
feed blocks, minerals and boluses containing trace elements and
minerals for livestock.
Its Engineering Division designs and manufactures bespoke
equipment, including robotic and remote handling equipment, and
provides technical services primarily into nuclear, oil and gas,
and defence industries.
Its Agricultural Supplies Division manufactures compound animal
feed, distributes farm machinery and fuels, and runs a UK network
of rural stores, providing a one-stop shop for the farming
community.
Introduction
On 31 August 2022, the Board of Carr's announced that, in line
with its strategic review announced on 18 January 2022, it had
entered into a sale and purchase agreement with the Purchaser
pursuant to which the Company would dispose of its interests in the
Agricultural Supplies Division to the Purchaser.
As part of the Transaction, the Company (through its relevant
subsidiary) has entered into a put and call option deed with a
group undertaking of the Purchaser relating to its leasehold
interest in land at the Rosehill Industrial Estate (Carlisle) (the
"Option Deed" ), as well as right of first refusal agreements
relating to the Company's interests in land at Barnard Castle,
Hexham, Penrith and Milnathort (the "Right of First Refusal
Agreements" ).
The Company and the Purchaser formed the Carr's Billington
Agriculture business in 1999 by bringing together the agricultural
interests of both companies to establish a market leading brand in
ruminant nutrition. Over the past 20 years, the business has
successfully expanded to become one of the leading suppliers of
farm inputs, machinery and fuel in the UK.
The Consideration in connection with the Disposal is payable by
the Purchaser predominantly at Completion and comprises an initial
purchase price of GBP43 million (on a debt free, cash free basis
and subject to a retention amount and to adjustments for estimated
net debt and estimated normalised working capital) and contingent
consideration of up to GBP1.5 million based on future performance
(the "Contingent Consideration" ), giving an aggregate
Consideration of up to GBP44.5 million. This aggregate
Consideration implies a multiple of 6.4 times 2021 adjusted EBITDA
on the basis of combined adjusted EBITDA for the Agricultural
Supplies Companies in FY 2021 of GBP13.8 million.
The initial purchase price of GBP43 million is expected to be
reduced by estimated debt of approximately GBP19.2 million,
increased by an estimated normalised working capital adjustment of
approximately GBP6.5 million, and an amount to be paid on a
deferred basis of at least GBP4 million (comprising a retention
relating to debtors of approximately GBP1.35 million and a further
deferred payment of GBP2.65 million). Initial cash proceeds are,
therefore, expected to be GBP26.4 million.
A maximum of approximately GBP0.7 million of the Contingent
Consideration is achievable within one year. The remaining
approximate GBP0.8 million of Contingent Consideration, if earned,
would fall due after more than one year. The deferred consideration
arrangements comprise of (i) a retention against debtors of
approximately GBP1.35 million, which is expected to be received in
the second year following Completion, and (ii) a further payment by
way of deferred consideration of an amount equal to GBP4 million
minus the finally determined retention for debtors, which (assuming
a positive amount) would fall due 12 months after Completion. On
the basis that the full Contingent Consideration is paid, the
deferred consideration amount is paid and the full debtor retention
is paid, the total estimated cash proceeds are approximately
GBP31.9 million. Transaction costs are estimated at approximately
GBP1.9 million and the Company is committed to make a payment of
GBP0.4 million to the Group's pension scheme following the removal
of the relevant employers from the scheme through a 'Flexible
Apportionment Arrangement', giving net cash proceeds from the
Disposal of approximately GBP29.6 million (the "Net Disposal
Proceeds").
In the event the put or call option under the Option Deed is
exercised in connection with the Company's leasehold interest in
land at the Rosehill Industrial Estate (Carlisle), a further GBP1.3
million is receivable. Additional proceeds may also be received in
the event that Carr's elects to sell the Group's real estate
interests at Barnard Castle, Hexham, Penrith and Milnathort and
Billingtons exercises its rights under the Right of First Refusal
Agreements.
Completion is expected to occur as soon as practicable following
satisfaction of the conditions precedent to Completion as set out
in the Sale and Purchase Agreement, which include the approval of
Shareholders.
Carr's Group Strategy
In January 2022, the Board announced a strategic review of all
three of the Group's divisions, (namely, the Agricultural Supplies
Division, the Speciality Agriculture Division and the Engineering
Division), with a particular focus on opportunities to increase
Shareholder value. Each of the Group's divisions is performing well
and has a leading position in its respective market. However, the
Board has determined that there are limited opportunities for
synergy between the Group's divisions, varying levels of ownership
and control of businesses, competing demands for capital investment
and differing returns anticipated on future investments.
As the first step in a long-term strategy, the Board has decided
to concentrate resources and investments on the Speciality
Agriculture Division and the Engineering Division, principally
because:
i. the Speciality Agriculture Division and the Engineering
Division have consistently achieved higher profit margins and have
the potential for better returns on capital employed than the
Agricultural Supplies Division;
ii. the businesses making up the most significant parts of each
of the Speciality Agriculture Division and the Engineering Division
are wholly owned and under the complete control of the Company,
whereas the Agricultural Supplies Division is jointly owned;
iii. the Speciality Agriculture Division and the Engineering
Division each have recognised market leading brands supplying an
international customer base, which combined with the anticipated
market development for each business, gives greater opportunity for
growth, whereas the Agricultural Supplies Division supplies a local
customer base within a region of the UK, with limited opportunity
to scale up in new geographies;
iv. the products manufactured and services supplied by the
Speciality Agriculture Division and the Engineering Division are
differentiated from their respective competitors with scope for
development and extension in the future, whereas the Agricultural
Supplies Division is a manufacturer and distributor of high volume,
low margin compound feeds and fuels, and a retailer of third party
brands and own label products; and
v. the Agricultural Supplies Division operates in a regional UK
market that has limited expectations of volume or customer growth
in the future in view of expected structural changes in the sector
(as farm ownership becomes more concentrated and dairy cow numbers
reduce) and therefore has less opportunity to improve margins as
many of the inputs are commodity-based with comparable products
available from competitors.
Speciality Agriculture Division
The Speciality Agriculture Division consists of market leading
brands in the supply of nutritional supplements to beef, dairy,
sheep and equine customers predominantly in the UK, Europe, North
America and New Zealand, with manufacturing assets in the UK,
Germany and the United States.
The Speciality Agriculture Division has considerable potential
for growth in sales, being well positioned for between eight per
cent. and 10 per cent. annual earnings growth, through increased
market penetration in North America, Europe and New Zealand,
product extension in its key markets and growth of equine product
sales in all markets. Current trends in ruminant agriculture,
particularly growth in low input grass and pasture-based management
systems, provide opportunities for the Company's brands, as they
are proven to be effective in more extensive grass-based nutrition
programmes rather than intensive, confined housing and
total-mixed-ration regimes. These trends arise due to the
increasing cost of cereals, soya and oilseeds required for
total-mixed-rations, consumer demands for grass-fed and free-range
food, and the scarcity of labour in livestock agriculture. To
deliver this sales growth, the Board estimates investment in
manufacturing facility upgrades and expansion, in the UK and
internationally, of approximately GBP10 million is required over
the next three years. Additionally, investment in product research
and development and strengthened commercial capabilities will
further support the Board's ambitions for the Speciality
Agriculture Division.
The Speciality Agriculture Division provides opportunities for
diversification in the products and services supplied to existing
customers and potential customers of existing products thus
enabling growth in markets where the Company is already well
established. Four trends in ruminant agriculture will be addressed
by technical solutions and new management systems, namely data as a
management tool, the reduced use of antibiotics, reduced methane
output, and improved productivity from less intensive grass-based
systems to reduce cereal and soya consumption. The Company is
exploring opportunities for investment and acquisition to add to
its existing capabilities to build a group of businesses that will
address the evolving needs of professional livestock farmers over
the next 25 years.
Engineering Division
The Engineering Division consists of long-established,
specialist companies with expertise and strong reputations in the
nuclear energy and defence sectors, providing market leading
capabilities in robotics, high specification fabrication and
bespoke engineering solutions. The Board believes these
capabilities will enable growth in revenues and profitability over
the next three to five years, as government and private sector
support for new nuclear power generation capacity, additional
nuclear defence assets and ongoing decommissioning of older nuclear
systems will provide substantial funding in markets that include
the UK, the United States, Japan, Europe and south-east Asia. The
Engineering Division will focus on core competencies and will
invest in developing customer relationships where cross-selling
provides additional opportunities.
The Board will support organic growth and development in the
Engineering Division to increase Shareholder value in the future.
The Engineering Division has a strong leadership team in place, a
growing order book and a pipeline of pre-qualification work and
tenders. Growth in the Engineering Division requires modestly
increased liquidity and additional skilled employees to provide the
capacity for larger and longer-term contracts that the Group is
being invited to bid for by existing and potential new
customers.
Summary Information on the Agricultural Supplies Division
The Carr's Billington Agriculture business, forming the Group's
Agricultural Supplies Division, has contributed to the growth of
the Group's revenue and profitability since 1999, alongside the
Speciality Agriculture Division and the Engineering Division.
From its beginnings as a ruminant feed manufacturing and
distribution business, development of Carrs Billington Agriculture
Sales extended activities to market leading brands of agricultural
machinery, parts and service, fuel supply and distribution, and a
chain of 32 retail stores supplying a full range of consumables and
equipment for farm and rural customers. The Carr's Billington
Agriculture business and Bibby Agriculture Limited are recognised
brands in ruminant feed, farm machinery, fuels and retail, serving
approximately 20,000 farmers and rural dwellers in the Midlands and
north of England, Wales, and south and central Scotland.
The Carr's Billington Agriculture business operates as two
separate entities. Carrs Billington Agriculture Sales manages the
sales of feeds direct to farm, including 50 per cent. of the Bibby
Agriculture Limited joint venture for feed sales in Wales,
franchises for agricultural machinery sales and service, depots and
distribution of fuel for farms and rural dwellers, and 32 retail
stores in various locations across the United Kingdom. Carrs
Billington Agriculture Sales is headquartered in Carlisle. For HY
2022, Carrs Billington Agriculture Sales achieved GBP158.7 million
in revenues and GBP2.0 million of operating profit (both
unaudited).
Carrs Billington Agriculture Operations comprises raw materials
purchasing, feed milling assets and distribution, manufacturing
over 500,000 tonnes of finished product per year. Carrs Billington
Agriculture Operations is headquartered in Lancaster. In HY 2022,
Carrs Billington Agriculture Operations achieved GBP70.9 million
(unaudited) in revenues and GBP1.6 million of operating profit
(unaudited) (pre cloud configuration and customisation costs
adjustments recognised at the Group level).
As at 26 February 2022, the Agricultural Supplies Division had
gross assets of GBP150.8 million (unaudited).
FY 2019 FY 2020 FY 2021 HY 2022
-------- -------- -------- --------
GBPm GBPm GBPm GBPm
Total revenue 296.3 280.7 297.5 158.7
Operating profit 5.3 4.5 4.9 2.6
Profit before
tax 4.8 4.0 4.6 2.3
Profit for period 4.0 3.4 4.0 2.0
Background to and strategic rationale for the Transaction
Following its decision to focus its strategy on the Speciality
Agriculture Division and the Engineering Division, the Board
initiated a thorough review of the options for the Agricultural
Supplies Division with a view to optimising Shareholder value. The
Board has concluded that, whilst the Agricultural Supplies Division
has performed well since formation, and has been a key part of the
development of the Company over the past 20 years, it is now of a
scale and market position that a single owner and management team
would be better placed to take the business forward through its
next phase of development.
In addition, Group resources, both in terms of executive
management and central corporate functions, are disproportionately
consumed by the day-to-day management and operation of Carrs
Billington Agriculture Sales, limiting the Group's ability to focus
and drive growth in the Speciality Agriculture Division and the
Engineering Division. In financial terms, the existing ownership
structure of Carrs Billington Agriculture Sales means that the
benefits and rewards of new initiatives and investment for growth
return only a proportion of the benefit to Shareholders.
Furthermore, the feed milling business of Carrs Billington
Agriculture Operations is capital intensive and will soon require a
high level of replacement capital investment at a rate of return
that will be lower than potential investments in the Speciality
Agriculture Division and the Engineering Division. The forthcoming
capital investment requirements could also potentially impact the
Agricultural Supplies Companies' ability to pay dividends up to the
Company.
In light of all circumstances, the Board determined that
Shareholder value would be best achieved through an exit from the
Agricultural Supplies Division.
By undertaking the Transaction, the desired exit will be
achieved, the Group structure will be simplified, and increased
focus will be given to the two remaining divisions (namely the
Speciality Agriculture Division and the Engineering Division), both
having attractive growth potential underpinned by a favourable
outlook and strong market positions. The Group has full ownership
of the larger companies within the Speciality Agriculture Division
and the Engineering Division, giving autonomy in decision making by
the executive management team and ensuring the return on growth
initiatives is fully for the benefit of Shareholders.
The Transaction also addresses Shareholder and investor concerns
that the structure of the Group's shareholding in the Agricultural
Supplies Division is opaque, thus causing difficulty in determining
a fair valuation of the individual divisions and overall Group.
Summary of the key terms of the Transaction
On 30 August 2022, Carr's entered into the Sale and Purchase
Agreement, pursuant to which the Company agreed, on the terms and
subject to the conditions of the Sale and Purchase Agreement, to
sell its interests in the Carr's Billington Agriculture business,
comprising its shares in both Carrs Billington Agriculture Sales
(together with its 50 per cent. shareholding in Bibby Agriculture
Limited) and Carrs Billington Agriculture Operations, to the
Purchaser.
The aggregate consideration payable by the Purchaser in
connection with the Disposal comprises:
(i) an initial cash purchase price of GBP43 million on a debt
free, cash free basis, subject to adjustments for estimated net
debt and estimated normalised working capital, minus
(ii) a retention and deferred consideration amount of GBP4 million,
which is payable at Completion and is subject to adjustments
after Completion by way of a standard completion accounts
mechanism, plus
(iii) payment of up to the retention amount (estimated to be
GBP1.35 million but ultimately being an amount (as at Completion)
that reflects 50 per cent. of the increase in overdue debtors of
the Agricultural Supplies Division as compared to FY 2021). The
first payment from the retention shall fall due in the second week
of FY 2024, with further payments due in each quarter of FY 2024
(and in each case representing a pass through of 50 pence on every
GBP1 received by the Agricultural Supplies Division from the
relevant overdue debtors during the relevant period). Should any
amount of the retention remain payable after FY 2024, the Company
shall be appointed debt collection agent on behalf of the
Agricultural Supplies Division for the purposes of obtaining due
payment of such overdue debts as equals the retention;
(iv) payment of a lump sum by way of deferred consideration on
the first anniversary of Completion, such amount to be equal to
GBP4 million minus the retention against debtors (referred to in
paragraph (iii) above) and to be finally determined by the
completion accounts mechanism. For the avoidance of doubt, should
the retention equal or exceed GBP4 million no such lump sum will be
payable; and
(v) the potential for a further GBP1.5 million of Contingent
Consideration payable following the conclusion of FY 2022 and FY
2023, depending on the performance of the Agricultural Supplies
Division against an agreed earn out criteria,
the net sum of which is the "Consideration".
Completion under the Sale and Purchase Agreement is subject to,
and can only occur upon satisfaction (or waiver, where applicable)
of certain outstanding conditions prior to the Long Stop Date,
including:
(i) approval of the Resolution by Shareholders, which is being
proposed as an ordinary resolution at the General Meeting;
(ii) drawdown by the Purchaser of funds made available to it by
Barclays Bank plc pursuant to an acquisition funding facility
agreement, in order to facilitate the Purchaser's payment of the
initial cash consideration on Completion; and
(iii) certain other conditions precedent which are customary for
a transaction of this nature.
There can be no assurance that the requisite approval from
Shareholders will be obtained, nor any guarantee that the Purchaser
will be able to finalise definitive financing documents with
Barclays Bank plc to enable it to drawdown sufficient funding and
pay the initial cash consideration amount on Completion.
The Sale and Purchase Agreement contains warranties as to title,
authority and capacity, solvency and anti-bribery and corruption in
respect of both Carrs Billington Agriculture Operations and Carrs
Billington Agriculture Sales given to the Purchaser by the
Company.
The Sale and Purchase Agreement also contains a market standard
set of general business warranties and a tax indemnity given to the
Purchaser by the Company in respect of Carrs Billington Agriculture
Sales and its business only. The Company's potential liability in
respect of these warranties and the tax indemnity is limited in
aggregate to GBP15 million and is further qualified by market
standard seller liability limitations.
As part of the Transaction, for a limited time following
Completion, Carr's and the Purchaser have agreed that the Company
and its Group will provide certain transitional services to the
Agricultural Supplies Division pursuant to the Transitional
Services Agreement.
The Board expects that, subject to the satisfaction and/or
waiver (where applicable) of the conditions precedent to the
Transaction, Completion will occur before the end of October
2022.
On or around the date of the Sale and Purchase Agreement, the
Company (through its relevant subsidiary) entered into the Option
Deed with a group undertaking of the Purchaser in relation to its
leasehold interest in land at the Rosehill Industrial Estate
(Carlisle). The Option Deed grants Carr's a put option to sell to
Billingtons the Company's leasehold interest in land at the
Rosehill Industrial Estate (Carlisle), for a period of one year,
commencing from the second anniversary of Completion, for a total
cash consideration of GBP1.3 million (reflecting its independently
assessed value). The Option Deed also grants Billingtons a call
option (on the same terms) exercisable at any time before the
second anniversary of Completion. The Option Deed contemplates
Billingtons may, in the first six months following Completion,
conduct environmental diligence on the Rosehill Industrial Estate
(Carlisle) following which, should a material issue come to light,
Billingtons may ultimately terminate the Option Deed.
Billingtons must pay a deposit of GBP130,000 during the option
period in order to validly exercise its call option. The deposit is
then deducted from the purchase price once the sale completes.
Completion of the sale is conditional upon the landlord
providing its consent in the form of a deed, free from unreasonable
conditions, or a declaration from a court that the landlord's
consent is unreasonably withheld.
The sale of the property is subject to certain special
conditions including in relation to matters affecting the property,
environmental matters and apportionment of rent between Carr's and
Billingtons. The sale of the property is otherwise subject to the
standard commercial property conditions under Part 1 of the
Standard Commercial Property Conditions (Third Edition).
As part of the Transaction, the Company (through its relevant
subsidiary) has also entered into the Right of First Refusal
Agreements with a group undertaking of the Purchaser in relation to
the sale of the Group's real estate interests at Barnard Castle,
Hexham, Penrith and Milnathort, all of which are leased to and
currently in use within the Agricultural Supplies Division. The
right of first refusal will require the Group to first offer these
properties to a group undertaking of the Purchaser in the event the
Group determines to dispose of them in the two year period
following Completion.
Use of proceeds and financial effects of the Transaction
The Disposal is expected to generate Net Disposal Proceeds of
approximately GBP29.6 million on the basis that the full Contingent
Consideration is paid and that the full debtor retention is paid.
The Board anticipates that the Transaction will produce a net cash
position for the Group at Completion. The Group intends to utilise
the Net Disposal Proceeds to invest in the Group in order to:
(i) support international growth in the Speciality Agriculture Division through the investment of approximately GBP10 million in manufacturing capacity and plant upgrades between 2023 and 2025;
(ii) enable growth in the Engineering Division by providing up
to an additional GBP4 million of liquidity over the next three
years to fund potential new larger and longer-term customer
contracts; and
(iii) fund carefully targeted acquisitions in the Speciality
Agriculture Division to diversify activity within a market sector
where the Group is already well-established.
Furthermore, following Completion, the Board intends to
determine the benefits for Shareholders of arranging a full buy-out
of the Group pension scheme, a legacy defined benefit pension
scheme that, as at the Latest Practicable Date, is in surplus, thus
securing all pension liabilities in the Group and eliminating
future risk of further funding being required from the Company. The
Directors understand this process would require approximately GBP4
million including the GBP0.4 million payment already committed.
The Transaction is expected to materially strengthen the Group's
balance sheet and the Group is expected to move to a net cash
position immediately following Completion prior to undertaking any
further investments as set out above.
It is expected that the Disposal will have a dilutive effect on
the earnings per Ordinary Share in the first full year following
Completion.
In the event the put or call option under the Option Deed is
exercised in connection with the Company's leasehold interest in
land at the Rosehill Industrial Estate (Carlisle), a further GBP1.3
million is receivable.
Class 1 Transaction and Related Party Transaction and General
Meeting
Due to the size of the Agricultural Supplies Division when
compared with the Company as determined by the class tests under
the Listing Rules, the Transaction is classified under the Listing
Rules as a Class 1 Transaction and therefore requires the approval
of Shareholders pursuant to Chapter 10 of the Listing Rules.
Furthermore, the Purchaser is a Related Party of the Company by
virtue of it being a 'substantial shareholder' (as defined in the
Listing Rules) of a subsidiary undertaking. The Company holds a 51
per cent. interest in Carrs Billington Agriculture Sales, thereby
resulting in Carrs Billington Agriculture Sales constituting a
subsidiary undertaking of the Company. The Purchaser is a
'substantial shareholder' of this subsidiary undertaking as it is
entitled to exercise more than 10 per cent. (49 per cent.) of the
votes able to be cast at a general meeting of Carrs Billington
Agriculture Sales. Therefore, the Transaction constitutes a Related
Party Transaction under Chapter 11 of the Listing Rules. As such,
the approval of Shareholders is also required pursuant to Chapter
11 of the Listing Rules.
A notice convening the General Meeting to be held at 9:30 a.m on
19 September 2022 at Hotel Sofitel London Heathrow, Terminal 5
London Heathrow Airport, London TW6 2GD will be sent to
Shareholders.
The Resolution proposes that the Transaction be approved and
that the Directors be authorised to take all such steps as may be
necessary, expedient or desirable in relation to the
Transaction.
Recommendation
The Board is of the opinion that the Transaction is fair and
reasonable so far as the Shareholders are concerned and the
Directors have been so advised by Investec as sponsor. In providing
advice to the Board, Investec has taken into account the Board's
commercial assessment of the Transaction.
The Board is also of the opinion that the Transaction and the
Resolution are in the best interests of the Company and its
Shareholders taken as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolution, as all of the Directors intend to
do (or procure to be done), in respect of the Ordinary Shares in
which they are interested, or in relation to which they are
otherwise able to control the exercise of the voting rights, held
at the time of the General Meeting, amounting to 569,703 Ordinary
Shares in aggregate as at the Latest Practicable Date (representing
approximately 0.61 per cent. of the issued ordinary share capital
of the Company).
Expected timetable of principal events
Last time and date for receipt of 9:30 a.m. on 15 September
Forms of Proxy or electronic appointments 2022
Record time for entitlement to vote 6:00 p.m. on 15 September
at the General Meeting 2022
General Meeting 9:30 a.m. on 19 September
2022
The times and dates set out in the expected timetable of
principal events above and mentioned in this announcement and in
any other announcement issued in connection with the Transaction
are subject to change by the Company, in which event details of the
new times and dates will be notified to the FCA and, where
appropriate, to shareholders.
Definitions
"Agricultural Supplies Carrs Billington Agriculture Sales
Companies" (including its 50 per cent. shareholding
in Bibby Agriculture Limited) and
Carrs Billington Agriculture Operations
"Agricultural Supplies the Carr's Billington Agriculture
Division" business, comprising the Agricultural
Supplies Companies
"Agricultural Supplies the Company's 51 per cent. interest
Shares" in the issued share capital of Carrs
Billington Agriculture Sales and
the Company's 49 per cent. interest
in the issued share capital of Carrs
Billington Agriculture Operations
"AminoMax(R) Arrangements" arrangements between the Company
and Carrs Billington Agriculture
Operations to manufacture AminoMax(R)
"Billingtons" the Purchaser and/or its relevant
group undertaking (as the case may
be)
"Board" the board of directors of the Company
"Carr's" or the "Group" the Company and its subsidiary undertakings
from time to time
"Carrs Billington Agriculture Carrs Billington Agriculture (Operations)
Operations" Limited
"Carrs Billington Agriculture Carrs Billington Agriculture (Sales)
Sales" Limited
"Company" Carr's Group plc
"Class 1 Transaction" has the meaning given to such term
in the Listing Rules
"Completion" the completion of the Transaction
in accordance with the terms of the
Transaction Documents
"Deed of Restrictive the deed of restrictive covenant
Covenant" between the Company, the Purchaser,
Carrs Billington Agriculture Sales
and Carrs Billington Agriculture
Operations
"Directors" the directors of the Company and
"Director" means any one of them
"Disposal" the proposed disposal of the Agricultural
Supplies Shares on the terms and
subject to the conditions set out
in the Sale and Purchase Agreement
"Distribution Agreements" the distribution agreement between
Carrs Agriculture Limited (as supplier)
and Carrs Billington Agriculture
Sales (as distributor) and the distribution
agreement between Animax Limited
(as supplier) and Carrs Billington
Agriculture Sales (as distributor)
"EBITDA" earnings before interest, tax, depreciation,
amortisation, profit/(loss) on the
disposal of non-current assets and
before share of post-tax results
of the associate and joint ventures
"Engineering Division" the Company's engineering division,
comprising the Company's businesses
across the UK, Europe and the United
States which manufacture complex
equipment and remote handling products,
and supply specialist technical services
to customers predominantly in nuclear,
defence, and oil and gas industries
"FCA" the Financial Conduct Authority
"FSMA" the Financial Services and Markets
Act 2000, as amended
"FY 2019" the 52 week period ended 31 August
2019
"FY 2020" the 52 week period ended 29 August
2020
"FY 2021" the 52 week period ended 28 August
2021
"FY 2022" the 53 week period ending 3 September
2022
"FY 2023" the 52 week period ending 2 September
2023
"FY 2024" the 52 week period ending 31 August
2024
"HY 2022" the 26 weeks ended 26 February 2022
"Investec" or "Sponsor" Investec Bank plc
"Latest Practicable 30 August 2022, being the latest
Date" practicable date prior to the publication
of this announcement
"Listing Rules" the listing rules of the FCA made
pursuant to Part VI of FSMA
"Long Stop Date" the date falling 60 days after the
date of the Sale and Purchase Agreement,
or such later date as agreed in writing
by the Company and the Purchaser
"Ordinary Shares" ordinary shares of 2.5 pence each
in the capital of the Company
"Purchaser" Edward Billington and Son Limited
"Related Party" has the meaning given to such term
in the Listing Rules
"Related Party Transaction" has the meaning given to such term
in the Listing Rules
"Resolution" the resolution to be proposed at
the General Meeting
"Sale and Purchase the sale and purchase agreement between
Agreement" the Company and the Purchaser governing
the key terms of the Disposal
"Shareholder" a holder of Ordinary Shares
"Speciality Agriculture the Company's speciality agriculture
Division" division, comprising feed blocks,
mineral supplements and animal health
businesses in the UK, Europe, North
America, and New Zealand
"Transaction" together the Disposal, the Option
Deed, the Right of First Refusal
Agreements and the Transitional Services
Agreement
"Transaction Documents" the Sale and Purchase Agreement,
the Transitional Services Agreement,
the Distribution Agreements, the
Option Deed, the Right of First Refusal
Agreements, the AminoMax(R) Arrangements
and the Deed of Restrictive Covenant
"Transitional Services" certain IT, payroll and pension administration
services to be provided by the Company
to the Agricultural Supplies Companies
in accordance with the terms of the
Transitional Services Agreement
"Transitional Services the agreement between the Company,
Agreement" Carrs Billington Agriculture Sales
and Carrs Billington Agriculture
Operations relating to the Transitional
Services
Important Notice
This announcement has been issued by, and is the sole
responsibility of, Carr's Group plc. No representation or warranty,
express or implied, is or will be made by, or in relation to, and
no responsibility or liability is or will be accepted by any
adviser to the Company or by any of their respective affiliates or
agents as to or in relation to the accuracy or completeness of this
announcement or any other written or oral information made
available to or publicly available to any interested party or its
advisers, and any responsibility or liability therefore is
expressly disclaimed.
Investec Bank plc which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority in the United
Kingdom, is acting exclusively for Carr's and for no one else in
connection with the subject matter of this announcement and will
not be responsible to anyone other than Carr's for providing the
protections afforded to its clients or for providing advice in
connection with the subject matter of this announcement.
Save for the responsibilities and liabilities, if any, of
Investec under FSMA, as amended, or the regulatory regime
established thereunder, Investec assume no responsibility
whatsoever and make no representations or warranties, express or
implied, in relation to the contents of this announcement,
including its accuracy, completeness or verification or for any
other statement made or purported to be made by the Company, or on
the Company's behalf, or by Investec or on Investec's behalf and
nothing contained in this announcement is, or shall be, relied on
as a promise or representation in this respect, whether as to the
past or the future, in connection with the Company or the
transaction. Investec disclaims to the fullest extent permitted by
law all and any responsibility and liability whether arising in
tort, contract or otherwise which it might otherwise be found to
have in respect of this announcement or any such statement.
The contents of this announcement do not constitute or form part
of an offer of or invitation to sell or issue or any solicitation
of any offer to purchase or subscribe for any securities for sale
in any jurisdiction nor shall they (or any part of them) or the
fact of their distribution form the basis of, or be relied upon in
connection with, or act as an inducement to enter into, any
contract or commitment to do so.
A copy of the Circular will be available on the Company's
website at www.carrsgroup.com . Neither the content of the
Company's website nor any website accessible by hyperlinks on the
Company's website is incorporated in, or forms part of, this
announcement. The Circular will give further details of the
transaction.
This announcement includes statements that are, or may be deemed
to be, forward-looking statements, beliefs or opinions, including
statements with respect to the Company's business, financial
condition and results of operations. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"anticipates", "targets", "aims", "continues", "expects",
"intends", "hopes", "may", "will", "would", "could" or "should" or,
in each case, their negative or other various or comparable
terminology. These statements are made by the Company's directors
in good faith based on the information available to them at the
date of this announcement and reflect the Company's directors'
beliefs and expectations. By their nature these statements involve
risk and uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. A number of
factors could cause actual results and developments to differ
materially from those expressed or implied by the forward-looking
statements. No representation or warranty is made that any of these
statements or forecasts will come to pass or that any forecast
results will be achieved. Forward-looking statements speak only as
at the date of this announcement and the Company and its advisers
expressly disclaim any obligations or undertaking to release any
update of, or revisions to, any forward-looking statements in this
announcement. As a result, you are cautioned not to place any undue
reliance on such forward-looking statements.
Nothing in this announcement is intended as a profit forecast or
estimate for any period and no statement in this announcement
should be interpreted to mean that earnings or earnings per share
or dividend per share for the Company for the current or future
financial years would necessarily match or exceed the historical
published earnings or earnings per share or dividend per share for
the Company.
Certain figures included in this announcement have been
subjected to rounding adjustments.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
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For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
DISBKDBKPBKKKFN
(END) Dow Jones Newswires
August 31, 2022 02:01 ET (06:01 GMT)
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