March 15, 2017

Irish agri-services group Origin Enterprises announced it has agreed to two acquisitions with a combined value exceeding US$40 million within a week’s time, just as the company also reported improved earnings for the first six months to the end of January 2017.

Fertilizer

The first acquisition agreement sealed by Origin was for UK-based prescription fertilizer and nutrition management business Bunn Fertilizer Ltd.

Formed over 200 years ago, Bunn services the arable grassland and horticulture sectors through the marketing of a wide range of technically-based agricultural nutrition input applications and through its established business-to-business and retail customer franchises. Through these activities, Bunn posted turnover of £127.7 million (US$157 million) for the year ending December 31, 2016, and earnings before interest and tax of £2.8 million (US$3.4 million).

“Bunn is an excellent business with a dedicated commitment to addressing the crop yield, quality, and soil fertility requirements of primary producers. Bunn advances the Group’s capacity to manage supply chain complexity as well as providing complementary customer and product channel access.”

Origin has agreed to pay a cash consideration of £14.2 million (US$17.5 million) which will be funded from existing bank facilities, however when including the estimated average working capital, the value of the deal totals £18.2 million (US$22.4 million).

The deal for Bunn is expected to add to earnings within its first year, and strengthen Origin’s already strong agricultural services, which are considered market-leading in Ireland, the UK, Poland, Romania, and Ukraine, according to Agriland.

Precision Ag

Just days following the announcement of the Bunn acquisition, Origin also announced the acquisition of digital precision agricultural services group, Resterra Group in a deal valued at up to £16.2 million (US$20 million).

Also based in the UK, Resterra operates under the Ag Space and IPF (Intelligent Precision Farming) brand names – supplying custom precision agri-tech agronomic services to growers, input manufacturers, and agri-services companies.

The strong branding associated with Resterra and its highly complimentary nature to Origin’s existing operations made Resterra a smart addition.

“Resterra is an excellent strategic fit for Origin, adding complementary expertise and strong brand reputation,” said Tom O’Mahony, CEO of Origin.

“Digital technologies have the potential to support the delivery of dynamic and highly customized crop management strategies to optimize gross margin at farm level. These developments are radically transforming how agronomists interact with farmers. Resterra will enhance Origin’s service capability in existing and wider geographies.”

Resterra’s expertise and knowledge-base surrounding software applications development, deployment, data capture, and analytics will also serve Origin well in its five-year collaborative research partnership with the University College Dublin, which was forged with the goal of building digitally-based and data-driven advisory tools for rapid and localized crop technology transfer, according to a company statement.

“Agriculture is changing fast,” said Ben Gillingham, co-founder and managing director of Resterra. “…and the combination of our technology with Origin’s agronomic expertise opens the opportunity to deliver powerful tools to support on-farm decision making. We are delighted to partner with Origin and we look forward to an exciting journey together.”

Building a Portfolio

Both of these deals follow the previous acquisition by Origin of Poland-based Kazgod Group for £24.05 million (US$29.6 million) in August 2015.

The acquisition of Kazgod, which provides inputs, agronomy services, marketing solutions, and manufactures micro nutrient applications, added to Origin’s presence in Poland where it serviced 3,500 arable farmers under its Dalety brand, and positioned the group as a leader in the agri service provider segment – giving Origin a significant expansion in scale, and potential for growth in the Eastern Europe market.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.