Business Irish

Monday 11 December 2017

Total Produce targets €1bn deal valuation

Rory Byrne, CEO of Total Produce, says he was surprised that Fyffes was sold
Rory Byrne, CEO of Total Produce, says he was surprised that Fyffes was sold
John Mulligan

John Mulligan

Europe's biggest fruit-and -vegetable distributor, Fyffes spin-off Total Produce could be worth around €1bn in a takeover scenario rather than the €623m market capitalisation placed on it by its current share price, CEO Rory Byrne has estimated.

That would make it more valuable than Fyffes itself, which was sold before Christmas to Japan's Sumitomo for €751m, with a huge 50pc premium put on Fyffes' shares at the time.

Based on the metrics used to value Fyffes, Mr Byrne said one "could argue along that basis" for Total Produce's own valuation under such a scenario.

"There's maybe further road to go," he told the Irish Independent in an interview. "As our market cap has crept up we've crept on to the radar of a wider investment group."

Total Produce, which has been building a presence in North America, posted revenue of €3.7bn and total adjusted earnings before interest, tax and amortisation (Ebita) of €45.8m.

"Obviously, if someone decides to make a takeover bid, there is undoubtedly is a takeover premium associated with doing that," he said, but said there was no suitor circling the firm as far as he was aware.

Mr Byrne also said that the company remained on the lookout for acquisitions.

"Up to now we have been the acquirer and we are one of the lead consolidators in our sector in both Europe and North America," he said. "We would be known as such. That opens as a lot of doors, opens up a lot of corporate finance people or people who are thinking of selling - they will come to us in the first instance to see what's possible."

Total Produce, in which the McCann family owns just over 11pc, also retains very low debt levels, despite having spent €60m on acquisitions last year.

"Financial constraints haven't been a restriction on our ability to do deals," he said.

"The advantage is that if we got the opportunity to do something very significant, we don't have to necessarily worry about where we would get the financial capacity to do it. We have significant financial flexibility."

Mr Byrne also said that being one of the largest players in its sector means that Total Produce has a greater chance of remaining independent.

"That is our strength to stay as an independently-quoted company - that we continue on that path of growth and our shareholders are happy with what we do and our share price, dividend and overall return continues to grow. That's the best defence," he said.

"We're not blind to the fact that takeover bids and things like that can come along. We do our homework to make sure we're prepared for those kinds of scenarios."

Total Produce, which has operations in 26 countries, has been expanding its presence in the United States, but Mr Byrne said opportunities to grow within Europe also continue to be present.

"Europe's a big, big market with the total value of the fruit and veg sector being about €60bn. We've got about a 5pc share of the market," he said.

He said that Brexit was unlikely to impact its business.

"In an ideal world you prefer that Brexit didn't happen in the manner that it did happen," he said, noting that the UK accounts for about 15pc of Total Produce's business.

"I don't see any fundamental changes in the pattern of trade or the consumption of fruit in the UK."

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