Bovine breeding company Genus is set to become the world’s leading animal genetics business with the takeover of Sygen International, a move which should benefit thousands of farmer shareholders.
Sygen, which includes the Pig Improvement Company, specialises in high-technology pig and shrimp genetic improvement.
Genus chief executive Richard Wood said the acquisition would help spread the risk of being involved with just one species.
The deal, which is based around an offer of 63.2p a share – 55% more than the average price over the 12 months to 11 October – values Sygen at about £187m.
Although this is more than Genus is currently worth, Mr Wood was confident the business could afford it. “Both businesses are highly cash-generative, debt levels should come down quickly.”
Mr Wood said the bid would be funded by a new placement of almost 17m Genus shares, which would raise £55m, as well as new bank facilities totalling £180m.
Genus has also just disposed of Genus Express, its veterinary wholesale business, for £8m.
City analyst Oriel Securities tipped Genus shares, now trading at about 350p, as a buy. It said the new business could be a “real world-beater” if it pulled off the integration successfully.
Peter Crichton, an independent pig consultant, said the deal should be good news for pork producers because the industry needed more investment to continue the work on breeding sturdier animals that were more resistant to pig wasting diseases.