Total Produce shares leap after Canadian venture
Published 18/12/2012 | 05:00
SHARES in Total Produce rose sharply after the fruit and vegetable distributor said it would move into North America and take a stake in a Canadian firm.
The company will take a 65pc stake in Grandview Ventures Limited, which trades as Oppenheimer Group.
Under the terms of the deal, Total will pay €11.7m for a 35pc stake next month, and will take an additional 30pc holding in 2017. The final price of the second tranche will be determined by the Oppenheimer performance but the total deal is expected to cost in the region of €32m.
Total will also make an additional payment in 2015 if performance targets are hit.
Vancouver-based Oppenheimer distributes fruit and vegetables across Canada and the United States. It had sales of €410m last year, resulting in operating profits of €8.6m.
The Total move marks its first venture into North America. Previously, it has been focused almost exclusively on the European market.
Company chairman Carl McCann said yesterday he was "very pleased" to have sealed what he called "an important entry" into North America.
"This transaction offers us a significant growth opportunity and represents a continuation of the group's development strategy of acquiring strong businesses in our sector," he said.
Oppenheimer boss John Anderson, who will continue to run the company, said the agreement would "strengthen our ability to grow strategically while benefiting our growers and customers as we continue to operate autonomously".
Davy analysts Cathal Kenny said the Canadian move looked like an "important development" for Total.
"It gives the group a meaningful footprint in the North American market. The strength of the Total Produce balance sheet facilitates non-organic developments such as this.
"With the investment likely to be earnings enhancing from date of completion, we expect it to be well received by the market," he said.
The Canadian transaction was originated by Davy Corporate Finance which provided advice to Total Produce. Ernst & Young Orenda Corporate Finance is acting as Financial Adviser to the Oppenheimer Group.
By the close in Dublin yesterday Total shares were up 1.9pc at 55c. The shares are up nearly 60pc in the last year.