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Chalks deal is done

06:00 01 January 2013

Peter Watson (Prism Corporate Broking),  Richard Blew (Needham Chalks) and Robert Fiske (Prism Corporate Broking)

Peter Watson (Prism Corporate Broking), Richard Blew (Needham Chalks) and Robert Fiske (Prism Corporate Broking)

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A FAMILY-OWNED quarry business has chalked up a multi-million pound sale deal.

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Needham Chalks and Alliance Technical Laboratories Ltd (ATLL), based at Needham Market, have been sold to Bishop’s Stortford-based Harlow Agricultural Merchants (HAM), which is owned by its staff and local farmers.

The Needham Chalks business, which includes a number of quarries and ATLL, were owned by the Smither family. The 40-strong workforce will remain, and the firm says it will be looking at taking on new staff this year.

The business, which specialises in quarrying, processing and merchanting chalks, was founded by Maurice Smither in 1947. In the 1980s, his entrepreneurial son, David, took over and the business grew, but he died in a tragic gardening accident at his home at Thrandeston near Eye in 2011.

By then, the firm had become the largest producer of quarried agricultural chalks in the region, and at sale had reserves of around 2.5million tonnes. It also established itself as the country’s largest supplier of knapped flints for the building trade.

Following David’s untimely death, and with no remaining family members working in the business, the shareholders decided to seek new owners.

Paul McCartney, who at the time of David’s death was part-time finance director, was appointed group chief executive. He said it had been a “whirlwind time” but believed the business would continue to flourish.

The sale was facilitated by Peter Watson and Robert Fiske of corporate brokers Prism Corporate Broking.

ATLL, a contract analytical laboratory with two distinct divisions, is the product of two laboratory acquisitions - Gooch Garforth in 1995 and Essex-based Alliance Technical Laboratories in 2004.

Needham Chalks director Richard Blew said: “The important factor that emerged right at the beginning of the process was the shareholders’ desire to find a buyer that would not only continue the current activities but also take the business to a new level.

“The sale price, whilst important, was not the overriding factor . Arguably selling the businesses, in particular the quarry assets, off in parcels could have led to a greater return.

“But we now have 40 locally based staff members from the Agricultural and laboratory businesses looking forward to a very bright future with our new go ahead owners.”

In July 2011 Mr McCartney was introduced to Robert Fiske and Peter Watson, directors at Prism Corporate Broking, specialists in advising clients on buying and selling businesses. Prior to marketing the business, Prism familiarised itself with both businesses, prepared sale documentation and researched potential acquirers. The team at Prism started marketing the businesses in April 2012.

“At the outset we were running two discrete sales processes, fully anticipating the two businesses would go to separate buyers, being that they are quite distinct operations”, said Robert Fiske of Prism.

“Indeed, the majority of interest – and offers - for both businesses did come from related sectors. Whilst we had identified obvious synergies between HAM and the chalks business, their interest in the laboratory as well proved especially compelling to our clients”.

Founded in 1980, HAM is a leading independent arable merchants, providing farmers with advice and service in agrochemicals, fertilisers, grain and seeds. In its last financial year it reported a turnover of more than £68m.

Both acquired businesses will continue to operate as usual with no redundancies expected. ATLL director Dr Michael Girling will remain as head of the laboratory operations and Needham Chalks director Richard Blew will continue in his role in charge of quarry operations and product sales.

Mr McCartney said: “This has been a bit of a whirlwind time for all of us following the sudden death of David. However we certainly chose the right people to help us through it. Peter and Robert at Prism proved their experience. They took everything in their stride, provided continual support and advice, and marketed the businesses in the right areas to attract appropriate candidates. They also negotiated a deal structure that ticked the boxes for all concerned. It’s also reassuring for David’s family to know that the businesses are now in the right hands for them to further flourish in the future.”

Peter Watson, of Prism, said: “It’s not every day that we come across a number of quarries to sell, however we are delighted with the outcome. Although this had been highly complex sale it did run smoothly, helped largely by the considerable amount of preparation Paul McCartney made for the sale. He and his team tidied up loose ends to ensure the business could stand up to the rigorous due diligence process. In situations such as this where you have a long-standing company with substantial and unusual properties, there are inevitably an enormous range of factors that need to be checked. The businesses were also part of a group structure with two separate holding companies – this merely added another dimension to for us all to contend with.

“It just goes to show that taking the time and effort to get a business in the right shape for sale helps to facilitate a much smoother process, both at the marketing stage and throughout formal due diligence. The deal process was aided by the considerable cooperation and input of our clients’ legal team at Birketts, led by James Austin with James Dinwiddy dealing with the property side, and Sue Gull and Jason Fayers at Scrutton Bland providing taxation advice. We’re excited about this deal and are delighted to unite two - sorry, three – well respected East Anglian businesses.”

HAM was advised by David Culshaw at Tees Solicitors and David Enser at Bird Luckin Chartered Accountants.

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