Monday 22 January 2018

Total Produce ups Canadian firm stake as profits surge

Total Produce chairman Carl McCann
Total Produce chairman Carl McCann
John Mulligan

John Mulligan

Total Produce remains on the hunt for acquisitions, having just boosted its holding in Canadian fresh produce distributor Oppy by paying €28.4m for an additional 30pc stake in the business.

Total Produce chairman Carl McCann said the company had spent €60m on acquisitions last year, including €17m in contingent consideration. They included the purchase of a 65pc stake in Los Angeles-based Progressive Produce for an initial €28m, with a contingent consideration of €10.5m.

He was speaking as Total Produce posted a 16.8pc increase in adjusted pre-tax profits to €67.7m for 2016, and revenue of €3.7bn, a 9pc rise. Excluding acquisitions, revenue was 4pc higher.

The group also said that it's increasing its share in Oppy to 65pc. It acquired its initial 35pc stake in the company behind the Oppy business in 2013 for €15m.

Oppy has annual sales of about C$1bn (€720m), and provides fresh produce to retailers, wholesalers and food services customers throughout the United States and Canada. As part of a wider transaction, Oppy has also signed a strategic deal with New Zealand-based T&G Global, the country's largest grower, packer, distributor, marketer and exporter of fresh produce, in volume terms.

T&G Global's majority shareholder is Germany's Baywa, a company whose activities stretch across agriculture, energy and building materials.

Under the deal struck with Oppy, T&G Global will increase its shareholding in Oppy's largest subsidiary, US-based David Oppenheimer & Co (DOC), to 39.4pc from the 15pc share it has held since 1997.

The enlarged T&G holding in DOC will be equivalent to the share in DOC held by Total Produce.

Oppy will also acquire from T&G Global a 50pc share in T&G Global's California-based export business, T&G Global North America, which trades in the market as Delica North America.

It primarily exports fresh produce to China and south east Asia.

Total Produce made acquisitions last year in the UK, the United States, Holland and Chile as it expanded its global footprint.

But it still has significant financial headroom to make further acquisitions. At the end of 2016, it had net debt of €48.4m compared to €18.1m at the end of 2015.

But its ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) stood at just 0.5 times at end of 2016.

Total Produce was spun off from Fyffes in 2006. Fyffes has just been sold for €751m to Japan's Sumitomo Corporation. Shares in Total Produce were trading 2.4pc higher after the open yesterday, valuing it at €609m.

Irish Independent

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