Friday 22 February 2019

Big fish Origin to seal deal taking Masstock on board

Pat Boyle

Origin Enterprises, the agribusiness interests spun off by IAWS last year, is to acquire the UK farm inputs group Masstock in a deal which values the UK firm at £61m, or almost $100m, once debts are included.

Masstock, with operations in the United Kingdom and Poland, is the leading provider of specialist agronomy services directly to arable and grassland farm enterprises.

According to Origin, Masstock has been synonymous with the development of state-of-the art farming systems throughout the world. It was established in the 1970s through the vision of two leading Irish entrepreneurs, Paddy and Alistair McGuckian.

And in a separate development Origin has entered exploratory discussions with a view to combining its fishmeal and fish oil operations with those of Norwegian firm Austevoll Seafood ASA.

Origin's fishmeal and fish oil activities are carried on through wholly-owned operations in Ireland and the United Kingdom in addition to its 50pc interest in a manufacturing facility in the Shetland Islands. Fishmeal and fish oil are specialised protein and energy raw materials principally supplied to the aquaculture feed industry.

Goodbody Stockbrokers said that including the net debt of £31m, Origin has paid 8.4 times earnings before interest and tax for Masstock.

The broker added that as well as boosting group earnings, the deal is attractive for its strategic importance as a business in its own right and as a possible catalyst for a more widespread involvement by Origin as a solutions provider to agriculture.

The initial consideration for the equity share capital of Masstock will be £26.3m with £10m deferred and dependent on set profit targets -- management will have to double earnings over the next five years for this to become payable.

Tom O'Mahony, Origin chief executive, said the acquisition significantly enhances Origin's capability to support primary food production. "The structural shifts taking place globally in the form of rising food demand and an increased awareness of agriculture as an alternative supplier of energy is placing an enormous focus on best farming practice and soil protection techniques required to deliver sustainable productivity.

"Masstock has the capability, expertise and proven ability to respond to this changing dynamic which, combined with the geographical spread of its business, presents a new exciting growth opportunity for Origin," he said.

Origin said the acquisition is being funded by additional bank facilities and added that the acquisition will be earnings enhancing for Origin from the date of completion, expected in early February 2008.

The existing management team who have been responsible for the development of Masstock over the past 20 years will be remaining with the group, it said.

Also in Business