Agricultural products supplier and retailer Wynnstay Group (LON: WYN) is raising £10.5m in a placing where the price will be set at 7am tomorrow morning, although the minimum will be 550p a share. The announcement was made after the official close the markets and the current share price is 660p.
Prices of milk and other farm products are rising, and this is sparking additional investment by farmers. Wynnstay believes that there are ways that it can use this trading backdrop to accelerate its growth.
Management have already declared that it wanted to redevelop the Calne feeds site that came with an acquisition earlier this year. This can be developed into a feed mill with a 185,000 metric tonne capacity and producing poultry and ruminant feed.
There are also opportunities for further acquisitions. Some of these are already being pursued by Wynnstay.
The company already has the shareholder approvals to issue enough shares to satisfy the demands of the placing.
The current share price is not far off the all-time high back in 2014. This is a cyclical business, so there tend to be cycles in the share price. The prospective 2022-23 multiple, before the latest placing, was just over 12. The placing will initially dilute earnings, although acquisitions could change that.
