Wednesday, April 26, 2017

News: Ranjit Boparan taking £5m stake in Crawshaws

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Crawshaw Group PLC, the fresh meat and food to go retailer, is hailing a transformational deal with the 2 Sisters Food Group that includes Ranjit Boparan becoming a significant shareholder in the Rotherham-based business.

The AIM-listed Hellaby firm is undergoing growth plans that will see it invest £200m, opening 200 stores and creating 2,500 jobs. The new investment is expected to enable Crawshaw to restart its accelerated new store opening programme, with an initial focus on factory shop locations.

Heads of terms have been agreed on a deal that will see 2 Sisters Food Group founder and chief executive, Ranjit Boparan (and connected party), invest approximately £5.1m for a 29.9% stake in Crawshaw, with warrants to acquire a further 20.1% of the Group.

The deal, which sees Boparan become an advisor to the Crawshaw Board, also includes an initial three-year supply agreement for Crawshaw to acquire fresh meat and other products from 2 Sisters, one of Europe's largest meat and food producers.

Crawshaw said that it would use its unique vertically integrated capability to take supply of quality fresh meat, poultry and other grocery products from the supply/demand imbalances, which prevents creation of unnecessary food waste.

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Noel Collett, chief executive of Crawshaw Group said: "This is a transformational partnership for the Crawshaw Group with a significant opportunity to offer a greater range and better availability to our customers. This new relationship provides a catalyst to our accelerated growth, both in sales and profitability."

"We very much welcome the 50/50 equity split as it reflects the symbiotic nature of the partnership and aligns both our interests to achieve maximum shareholder value. The two-stage subscription including conditional warrants will allow the commercial benefit to be demonstrated as part of the process."

Ranjit Boparan, chief executive of Boparan Holdings Ltd, added: "This is a great opportunity that complements our corporate social responsibility policy and our aim to reduce levels of quality food that would otherwise go to waste. Our businesses have a significant number of opportunities to work through together in the coming weeks and months."

The announcement of the deal comes at the same time as Crawshaw announced its final results for the full year ended January 29 2017.

Turnover was up 19% to £44.2m from the £37.1m reported in the previous year. Investing in expansion plans, the group made a loss before tax of £1.4m, an increase on the loss of £0.3m.

The expansion plan stumbled a little in 2016. As new stores opened, standardised offers and price points were also introduced into existing stores but the management admitted that they "didn't resonate as well with customers as we thought."

Changes were made to give store managers flexibility to re-introduce local products, sizes, price points and offers that were previously on sale in their specific store.

Collett added: "By listening to customers and focusing on the demands of each store's individual local community, we have seen a sharp recovery in both sales and customer numbers throughout the second half of the year."

The group opened 11 new stores during the period and now operates from 49 sites. It reported like for like sales down -7.3% for the full year.

2018 will see a disciplined approach to its growth strategy with a focus on factory stores which have higher sales, lower operating costs and lower fit out costs than units on the high street and in shopping centres.

It was also announced that Richard Rose is to retire after 11 years as chairman of the Group. Jim McCarthy, former boss of budget chain Poundland, is set to replace him in the role.

Crawshaw website

Images: Crawshaw


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