Wynnstay revealed an appetite for further acquisitions, and some financial firepower for deals too, even as the agribusiness won support for its latest takeover, of a Welsh farm retail chain.
The UK-based company, announcing that its offer for Carmarthen and Pumsaint Farmers' store chain had been backed by the co-operative's members, revealed that it had undertaken a capital raise to support the takeover, selling new shares to existing and new investors.
Thanks to "very strong investor demand", Wynnstay had been able to raise £9.0m, "funds above the amount we needed to fund the acquisition", Ken Greetham, the group's chief executive, said,
These funds "will help to support our position as a consolidator in the agricultural sector", he said.
Wynnstay has fuelled its growth from regional co-operative into a listed company with a market capitalisation of £94m ($148m) through a series of purchases, ranging from individual stores to businesses such as Woodhead Seeds and grain trader Glasson Group.
It has undertaken 17 acquisitions since March 2011.
However, Mr Greetham urged caution against expectations of a swift follow-up to the Carmarthen and Pumsaint Farmers deal, which is expected to close at the end of this month.
"We have grown historically through bolt on acquisitions, and every so often a deal a little bit larger," he told Agrimoney.com.
"We want to make share that if a chance for a bolt-on acquisition does appear, we can deal with it."
The company was not prioritising deals in any of the sectors it operates in, but would pounce on suitable opportunities as they arose, he added.
'High cost base'
He outlined a gentle introduction for the Carmarthen and Pumsaint Farmers stores to ownership by Wynnstay, despite acknowledging that higher costs had put the co-operative under pressure, saying that for now efficiencies would be focused on the "manufacturing point of view".
The co-operative's agreement to the deal follows its decline from a £97,000 profit in the year to the end of September 2011 to a loss of £868,000 the following year, on turnover of £23.9m, filings reveal.
"As a co-operative, they have not really been challenged," Mr Greetham said.
"They have not had to focus on turning a profit, but on providing good service to their members," farmers in south Wales.
Its "high cost base made it difficult" for the co-operative to remain profitable.
UK farming suffered last year from dismally wet weather which, besides badly hurting arable production, exacerbated to livestock farmers the impact of a rise in international grain prices.
The UK farming sector now appeared "more balanced", with a fall in wheat prices from some £180-200 a tonne last year to £140-150 a tonne enabling profits for growers while "leaving a little bit" for livestock and dairy producers.
"They can all do OK out of the situation," he said.
Wynnstay shares stood 1.0% lower at 555.5p in lunchtime deals in London.
Hunters become hunted?
Shore Capital, which arranged the capital raise, said that the acquisition of the Carmarthen and Pumsaint Farmers assets "makes strategic and financial sense".
"The acquired stores would also be highly complementary in further developing the group's country store network into south Wales, where Wynnstay is currently under represented."
The operations acquired also include "complementary trading activities such as feed and fertiliser distribution".
VSA Capital said that it expected consolidation to continue among UK agribusinesses, fuelled by Wynnstay and peers such as Carr's Milling Industries and NWF.
Indeed, as these companies "grow their operations through acquisitions and organically, they themselves will become attractive to potential acquirers", VSA analyst Edward Hugo said.