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Food and engineering group Carr’s (CARR) has sold its food division Carr’s Flour Mills to fellow flour miller Whitworths for £36m.
The gross sum of £36m is reduced to a net total of £24.9m after adjustments for working capital and net debt in the business upon completion.
Carr’s will return £16 of the proceeds to shareholders in the form of a special dividend of 17.54p per share. The remaining £8.9m will be used to strengthen its balance sheet and will provide the opportunity to expand its continuing businesses, both by acquisition and organic growth.
Carr’s said the disposal is part of its strategic plan to be an international company at the forefront of innovation and technology across both of its remaining businesses of agriculture and engineering.
Tim Davies, chief executive of Carr’s commented: “The sale of Carr’s Flour Mills Ltd represents an exciting stage in Carr’s strategic development. At a time of increasing competition and volatility in the flour market, consolidation is essential and inevitable. This acquisition by Whitworths presents a great opportunity for the food division to continue building on the strong foundations laid over many years.”
“We will continue to focus on our strategy of delivering growth in our UK agriculture business, the development of our international feed supplement businesses and building our specialist engineering division in niche markets across the globe.”
Martin George, chairman of Whitworths Holdings Limited, commented: “Carr’s Flour Mills Ltd shares a similar history to Whitworths in that it is a long standing business which has received material investment in recent years.
“The business is a great fit geographically and will give us access to the South East, North of England and Scottish markets that would otherwise not be available and means we have national reach.”
Carr’s shares have jumped 6.3% this morning to 154.1p on the news.
Morning update
The Carr’s news apart there is little else of note on the markets this morning, but it promises to be a busier week this week with the crucial Poundland takeover vote to come on Wednesday (see below).
The FTSE 100 has opened flat at 6,893.3pts this morning, consolidating the strong 2.6% gain the index made on Friday.
Away from Carr’s, strong gains have also been seen at PayPoint (PAY), up 2.6% to 1,048p, Total Produce (TOT), up 2% to 136.7p, Devro (DVO), up 1.7% to 238.6p and Applegreen (APGN), up 1.7% to 393p.
Early fallers include Real Good Food (RGD), down 1.5% to 33p, Glanbia (GLB), up 1.4% to €17.37 and Imperial Brands (IMB), down 1.3% to 4,075p.
Morrisons (MRW) has opened 0.5% higher at 198p as the market digests its latest round of major price cuts. The main victim of this new front in the price war could be Tesco (TSCO), which is down 1.4% to 169.3p this morning.
This week in the City
The first full week of September sees the pace pick in the City this week as the summer holidays draw to a close.
The week kicks off with the BRC-KPMG Retail sales for August on Tuesday, with food sales expected to be on an upward trend boosted by the warm August weather.
Perhaps the main even of the week is the Poundland (PLND) AGM on Wednesday, which will also serve as an EGM for shareholders to vote on the proposed £610m takeover bid by South African retail group Steinhoff. The vote looks to be on a knife-edge despite Steinhoff raising its offer last month as activist shareholder Elliott Capital raised its stake to 22.7% of Poundland – a level at which it can block the deal.
Wednesday will see the release of full year results from private label household goods manufacturer McBride (MCB). Also on Wednesday is the Sports Direct AGM, which promises to be a stormy affair after recent criticism of its quality of governance.
The Barclays Global Consumer Staples Conference is on all week this week in Boston, USA, with presentations from all the world’s biggest consumer goods giants, including Coca-Cola (KO), Mondelez (MDLZ) and Unilever (ULVR).
Finally, the Grocer Price Index is scheduled to be published on Friday, with the GPI seeing a notable drop in deflation during the summer as the weak pound and strengthening commodity prices ease supermarket price cuts back from their record 3%-plus levels from June.
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