Sale of Titan will help to grow operation
Selling a majority stake in the Nelson-based Titan slicer company to stainless steel manufacturer Mercer kept it in New Zealand hands and would give it the resources to grow, Titan owner Sean Marr said today.
Christchurch-based Mercer yesterday announced it had signed an unconditional $1 million deal to buy 75 per cent of Titan NZ, its sales and marketing arm, and 25 per cent of Titan Design.
Titan designs and manufactures world-leading food slicers, particularly for the bacon, ham, salmon and cheese sectors. Its owners include Marr, who will continue running Titan.
Marr said it was good deal because it would allow Titan to reach its potential.
Lack of capital and staff resources had hindered its growth, he said. ‘‘It’s been our major problem from day one.’’
Despite Titan having designed a slicer that was widely considered ahead of its time, turnover at $4.5m was the same as two years ago, he said.
The deal with Mercer would protect the company from its biggest competitors, Marr said.
‘‘Up until the Mercer deal, I had four offers on the table from American companies and we rejected all of them in favour of being in partnership with a New Zealand company
While some might consider the Mercer purchase price as being on the low side, Marr said he ‘‘would always want a small chunk of something really big as opposed to a big chunk of something really small’’.
‘‘We have partnered with someone we can trust.’’
Mercer chief executive Rodger Shepherd said Titan exported most of its products and had a strong order book.
‘‘Titan will benefit from having Mercer invest in the company and perform the manufacturing,’’ he said.
Mercer, which is listed on the NZX, will fund the purchase from existing cash flows and BNZ bank- ing facilities. It will also provide some working capital to assist Titan’s growth.
‘‘Mercer expects this deal will be earnings positive from day one.’’
Shepherd took on the Mercer chief executive role in August as part of a move to restructure the manufacturer, whose key shareholder is Christchurch businessman Humphry Rolleston.
Timaru’s Jean Hubbard and her late husband, Allan, along with associated interests, once held a 45.13 per cent stake in Mercer. But with the Hubbards’ assets in statutory management, and Mercer having undertaken a rights issue of shares, that stake had dwindled to about 14 per cent, Shepherd said in March. Mercer shares were untraded at 12c yesterday.