Potato trade sees more consolidation

15 May 1998

Potato trade sees more consolidation

CONSOLIDATION in the potato industry is gathering pace; two leading potato firms are discussing merger plans and Hillsdown Holdings is to sell MBM Produce.

The merger involves specialist pre-packer and seed producer Greenvale Produce, formed in 1996 after a management buyout from Dalgety, and East Anglia-based co-op Anglian Produce, which has 233 grower members.

Each company has a grower base of about 8100ha (20,000 acres). The move would spawn the biggest potato company in the UK, handling over 800,000t of potatoes a year, or 12% of UK production – just ahead of MBM, the current leader.

Provisional agreements to form the new company, which would have a combined turnover of £150m-£200m, were signed last week, says Greenvales finance director, Andy Behagg. Provided AP members approve the deal, it should be completed by June 30, he adds.

AP assets will merge with the new limited company, and farmer members will receive shares, says APs managing director, Stuart Smith.

A new co-operative arm covering the growing and supply side will then be formed, which will have an exclusive marketing agreement with the new company.

Further growth could include the MBM business, adds Mr Smith. "There is a lot of scope for further rationalisation in the industry. We are looking for further opportunities to expand."

The MBM sale is one of several disposals which are expected to raise £500m-£600m for parent Hillsdown Holdings. That will pay off some of its £300m debt and provide a cash payment to shareholders, after many years of poor share performance. Other activities for sale include Buxted Chickens and Daylay eggs.

Both announcements follow the acquisition of United Biscuits KP potato division by Doncaster-based Higgins Group. The deal gives the group exclusive rights to supply potatoes to KP Foods. &#42

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