Associated British Foods (AB Foods), the owner of Primark (which trades as Penneys in Ireland) and major sugar, foods and ingredients businesses, said it would buy dairy technology company National Milk Records for £48 million to boost its agri-food unit.
While it is best known for the value fashion retailer Primark which makes up almost half of its £17 billion of revenue, AB Foods is also one of the largest UK food producers and operates one of the country's biggest animal feed businesses.
Technology Platforms
AB Foods said on Tuesday that NMR's expertise in the dairy industry would help grow its agriculture business, adding data and technology platforms which help farmers become more profitable, initially in Britain.
"NMR is a high-quality business which is extremely complementary and additive to our dairy strategy and offering to the dairy industry," said Jose Nobre, head of AB Foods' AB Agri unit.
NMR's board has recommended ABF's 215 pence per share cash offer and AB Foods said in its statement that it had already received backing for the deal from investors holding about 69% of shares, close to the 75% threshold needed to approve the deal.
The deal is expected to be completed during the third quarter.
Food Prices
On the 31 May, AB Foods noted that it does not expect to have to push through many more price increases to its food customers in the second half of the year, as input costs including wheat, vegetable oils, freight and energy-start to fall.
Chief executive George Weston told Reuters that the group, which has a grocery business including the Twinings tea, Jordans cereals and Ovaltine drinks brands, had managed to increase prices to cover its higher cost of raw materials.
"We've had 18 months of trying to keep up with these cost increases," he told Reuters as the group reported first half results.
Read More: AB Foods Says Cycle Of Food Price Rises Nearing The End
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