UK—ForFarmers United Kingdom and 2Agriculture have come to an agreement to merge their businesses into a joint venture to serve a wider customer base.

The joint venture will have a balanced feed portfolio across species, with an expected combined sales volume of more than 3 million tons of compound feed per year.

At the same time the joint venture makes for a robust business, with improved expertise and presence across species allows it to meet changing demands in the agriculture and food sector. The deal also meets the strategic objectives of both partners.

ForFarmers UK strengthens its position in its home country in the promising poultry sector and at the same time creates possibilities to make the organization more efficient.

2Agriculture benefits 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 U.K. competition authority.

The joint venture will bring together 2Agriculture’s expertise in the promising poultry feed sector with ForFarmers’ capabilities in research and development as well as in formulation.

In addition, the combined broad geographic coverage will provide synergy opportunities, particularly in production and logistics and will also generate further benefits for its customers by being able to combine the sourcing of raw materials.

Finally, the joint venture will invest in expansion of the supply chain, enabling improved transparency around sustainability and the origin and quality of food.

Steven Read, managing director of ForFarmers UK and nominated managing director of the intended joint venture, said: “Together, we can meet the changing requirements from customers and society through our strength in innovation and feed concepts.”

Kevin Sketcher, managing director of 2Agriculture and nominated board member of the intended joint venture, said: “We will be able to give our combined customer base across all species value for money by providing them with sustainable, high-quality feed. Moreover, we will be well positioned to support the agricultural sector offering food security to U.K. consumers.”

UK feed market

Feedstrategy estimates the total feed market in the United Kingdom at approximately 17.5 million tons, with the expectations for the poultry sector being the most positive.

he majority of poultry feed produced in the United Kingdom is manufactured in-house by poultry processors for integrated use in their supply chains. The United Kingdom is not fully self-sufficient with respect to production of fresh chicken (95%) nor of pig meat (60%).

Although the pig market is expected to grow in the mid to longer term, the short-term outlook is that the market will remain stable due to the destabilized European pig market as a result of various outbreaks of African swine fever. The dairy market is self-sufficient and the ruminant sector in general is expected to grow minimally.

Terms of the merger

The merger agreement is a non-cash transaction. The share split will be 50.1% for ForFarmers U.K. and 49.9% for 2Agriculture.

This is based on the enterprise value of both joint venture partners, and takes into account the respective expectations for 2022 and beyond.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE.