The firm will receive a net sum of £24.9m after adjustments for working capital and net debt in the business following the sale, to ingredients company Whitworths.
Carr’s, which said the disposal of the food operation will support its aims of becoming “an international company at the forefront of innovation and technology across both of its remaining businesses of agriculture and engineering,” will return £16m to shareholders in the form of a special dividend amounting to 17.54p a share. The remaining £8.9m will be used to bolster its balance sheet and pursue acquisition opportunities.
Chief executive Tim Davies said: “At a time of increasing competition and volatility in the flour market, consolidation is essential and inevitable. This acquisition by Whitworths presents a great opportunity for the food division to continue building on the strong foundations laid over many years.”
He added: “We will continue to focus on our strategy of delivering growth in our UK agriculture business, the development of our international feed supplement businesses and building our specialist engineering division in niche markets across the globe. Carr’s continues to benefit from both operational and geographic diversity and a strong balance sheet and we look forward to an exciting future focussed on delivering growth in our higher-margin products and services within the agriculture and engineering divisions.”
As well as its £17m Kirkcaldy site, Carr’s food division has operations in Cumbria and Essex. In the year to 29 August 2015, the business delivered a pre-tax profit of £2.4m on revenues of £80.3m.
Whitworths chairman Martin George said the firm, best known for its home baking products, shared a similar history with Carr’s Flour Mills “in that it is a long-standing business which has received material investment in recent years”.
He said: “The business is a great fit geographically and will give us access to the south-east, north of England and Scottish markets that would otherwise not be available and means we have national reach.”