5 May 2011 – acquisition

The agricultural and retail group has announced that it has acquired Wrekin Grain Limited, a leading independent grain marketing and agricultural inputs supplier.  The business is based in Telford, Shropshire and the net consideration should be £4.0m after taking into account the utilisation of surplus cash. Of this £3.0m is payable in cash on completion and a further consideration, up to a maximum of £1.0m, may also be payable, based on future profits.

Strategically this looks interesting as the acquisition more than doubles Wynnstay’s existing grain marketing volumes and widens its geographic trading area.  For the year ended 31 March 2010, Wrekin generated revenues of £33.87m and operating profits of £0.66m.  Its net assets at completion (excluding surplus cash of approximately £1.0m) are expected to amount to £0.40m. Wynnstay intends to combine Wrekin with its existing grain trading company, Shropshire Grain Ltd, and to rebrand the enlarged business as ‘GrainLink Limited’.  Cross-selling opportunities are expected and overall we see this as a positive step.  Interim results for the six months ended 30 April 2011 are due out on 22 June and although the share price has been firm it continues to represent GOOD VALUE.