Origin’s deal with Bunn Fertiliser falls foul of competition rules

Irish agri-services company Origin Enterprises' acquisition of the fertiliser activities of Bunn Fertiliser earlier this year has fallen foul of UK competition authorities.

The company, which also acquired other assets of Bunn Fertiliser, struck the £14.2 million (€16.4 million) deal in March. It was designed to optimise the group’s ability to manage supply chain complexity.

In a note to investors on Friday, Origin said it noted the findings of the Competition and Markets Authority (CMA) in respect of the deal.

“The CMA has found that Origin’s proposed acquisition of Bunn could reduce competition to supply fertilisers in the central/eastern region of Scotland,” it said.

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“Origin is now considering the implications of the CMA findings and will provide a further update in due course.”

Bunn, a UK provider of prescription fertiliser blends and nutrition management systems, has an established business-to-business and retail customer franchise. Bunn’s turnover for the year ended December 31st, 2016, was £127.7 million.

Origin chief executive Tom O’Mahony said at the time of the acquisition that it would “advance the group’s capacity to manage supply chain complexity as well as providing complementary customer and product channel access”.

The acquisition, which was awaiting the CMA decision before being finalised, was to be funded from existing bank facilities and was expected to be “earnings enhancing” in the first full year of ownership.

Earlier this week, shares in Origin were upgraded by investment firm Investec to outright "buy" amid a recovering market for its products and as the company increases acquisition spend.

Origin shares gained as much as 3.4 per cent in early trading on Tuesday to €6.90. However, they dipped by over 1 per cent in late trading, as European markets sold off towards the close.

Investec analyst Ian Hunter, who previously had a "hold" rating on the company, also raised his earnings forecasts and share price target on the stock by 30c to €7.30.