Belfast Telegraph

Sunday 31 August 2014

Moy Park set for London flotation

Skyscrapers dominate the skyline in London's financial district. Moy Park and parent company Marfrig is considering flotation, possibly on the London Stock Exchange
Skyscrapers dominate the skyline in London's financial district. Moy Park and parent company Marfrig is considering flotation, possibly on the London Stock Exchange
Moy Park CEO, Janet McCollum

Northern Ireland's number one company Moy Park may be heading for the Stock Market.

Sergio Rial, chief executive of its Brazilian parent company Marfrig, has said the company is considering selling stakes in Moy Park and Keystone Foods in the US so that it can pay down some of its debt.

He told Bloomberg that a flotation could happen this year.

Craigavon-based Moy Park has been the number one firm in the Belfast Telegraph's Top 100 Companies for the last four years. In its most recent results, it made pre-tax profits of £33.8m on turnover of £1.2bn.

A spokeswoman for Moy Park said: "As part of ongoing work to support our growth strategy, Marfrig has stated that it is exploring the possibility of taking Moy Park and Keystone Foods public.

"Although still at an exploratory stage, this has the potential to create positive opportunities for Moy Park.

"Should Marfrig progress with an initial public offering, the company will maintain a comfortable majority control and will be able to inject additional capital to support more rapid organic growth in Europe and Asia – including the Moy Park business."

She said neither Moy Park nor the parent company could comment further on the proposal because it was now in a "quiet period" ahead of Marfrig's results.

But economist John Simpson said Moy Park was not the only Northern Ireland firm which could soon go public. "Hypothetically, high on the list of candidates might be Dunbia, Almac, John Henderson, Fane Valley Co-op, Ballyvesey and Norbrook Laboratories."

And a decision allowing Northern Ireland to set its own rate of corporation tax could act as a further catalyst. Prime Minister David Cameron is expected to make a decision on the issue after the Scottish referendum in September.

"Then there may be circumstances where externally owned businesses devolve more tax planning to local entities," Mr Simpson said. "This type of new thinking may be relevant to Moy Park as a wholly owned subsidiary of Marfrig from Brazil."

Echoing Mr Rial's statement to Bloomberg at the end of March, he said a partial flotation would help Marfrig reduce the cost of its borrowing.

Northern Ireland's most successful flotation was arguably Galen plc, he said, which changed hands nearly two decades ago.

Colin Walsh, chairman of the CBI and chief executive of Crescent Capital – which famously funded one-time listed company Andor Technology – said: "Speaking generally, I would favour flotation as it gives a business control over its own destiny and an ability to finance its growth and development by accessing the capital markets.

"Food businesses do not generally attract high multiples, but the stock market is quite buoyant at the moment so if they were minded to do it, now would be a good time."

BACKGROUND

Suggestions Moy Park might float come after it was named as one of the UK's major contributors to the country's £3.3bn poultry meat industry. The firm, which employs over 5,500 at factories in Dungannon, Ballymena and Craigavon and over 11,500 people in the UK and Europe, contributes over £1bn in sales, according to Oxford Economics. It was also named the number one company in Northern Ireland this week in the Belfast Telegraph's Top 100 Companies, with £33.8m in profits on £1.2bn turnover.

Raise cash but relinquish control... the dilemma of a flotation

By John Simpson

Northern Ireland has very few locally-based companies with a Stock Market quotation. In the last year, the number has fallen from three to two.

With the purchase by Oxford Instruments of Andor Technology, the former shareholders have enjoyed an appreciable capital gain on their original investment. Andor is no longer separately quoted.

The other locally-based quoted companies which are trading successfully are UTV Media and First Derivatives.

Conventionally, a growing business may seek a stock market quotation to raise capital, or to replace or release family invested funds back to the original investors who may have originally been small investors.

Not every growing successful local business will want to gain a Stock Market quotation. Some (often family-controlled) businesses protect their privacy by retaining family control and avoiding the scrutiny that comes with a quotation, shareholders meetings and the related legal obligations of their governance.

In the recent business history of Northern Ireland, very few businesses have sought a quotation because they needed extra capital. Many successful businesses, that might have sought a quotation, have been able to invest by relying on retained profits, family funds, government investment grants or using more extensive bank lending which was available prior to the financial crash affecting the local banks.

There are persuasive arguments for tightly controlled private family firms to consider a quotation. A quoted company can be a more suitable vehicle when a family plans for the succession arrangements if, or when, management changes are needed.

A flotation to become a quoted company is a sign of business strength which will be continuously monitored by market forces. Some successful local businesses might readily gain a quotation but have not taken that option.

Business View: Moy Park set to spread its wings

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