ForFarmers and 2Agriculture have come to an agreement to merge their businesses into a joint venture in the UK. The joint venture will have an expected combined sales volume of more than 3 million tonnes of compound feed per year.
The companies said the joint venture would make for a robust business, with improved expertise and presence across species.
ForFarmers said the agreement would strengthen its position in the poultry sector and at the same time would create possibilities to make the organisation more efficient. 2Agriculture said it would benefit from shared investment opportunities across a larger volume, an increased geographic spread of manufacturing sites and exposure to other species markets. The deal will be subject to approval from the UK competition authority.
ForFarmers UK sells approximately 2 million tonnes of compound feed volumes annually (i.e. excluding volumes of straights and co-products) across species, produced in 14 mills. The majority of feed produced by ForFarmers is for ruminants and pigs, with smaller volumes being produced for poultry. The company has approximately 900 employees.
2Agriculture supplies approximately 1.2 million tonnes of feed annually to poultry farmers mostly into the integrated market, but also to independent customers. The company employs 250 employees and operates five mills located in Scotland, East Anglia and North Wales and has an extrusion plant in Cambridgeshire.
The merger agreement is a non-cash transaction. The share split will be 50.1% for ForFarmers UK and 49.9% for 2Agriculture. This is based on the current enterprise value of both joint venture partners, and takes into account the respective expectations for 2022 and beyond. The share split also reflects the fact that 2Agriculture is fully focused on the promising poultry sector and has existing supply arrangements in the integrated market. ForFarmers will consolidate 2Agriculture fully into its financial results.