Derrimon Trading Company Limited on Friday announced a definitive agreement to purchase the entire shareholding of pallets manufacturer Woodcats International Limited.
Financing has been arranged by Mayberry Investments Limited and the transaction is expected to close within a month. But the acquisition price was not disclosed.
Derrimon chairman and CEO Derrick Cotterell said seller Christopher Collings wanted the price to remain confidential, but added that it was in the "multimillions".
The deal, which takes Derrimon outside its core business of food distribution and retail grocery, includes 45,000 square feet of factory and warehouse space at Woodcats' 27 Slipe Road base in Kingston.
Woodcats was founded by Collings in 1999. The company makes a full range of pallet solutions for warehouse storage and export, and it reconditions and repairs used pallets, said a joint release announcing the deal. It also distributes plastic pallets and produces shipping boxes, crates and lobster traps, and produces garden mulch, which is distributed nationwide under its Summerland brand.
Cotterell told the Financial Gleaner that the purchase was being made with an eye to diversification. The company operates grocery retail outlets Sampars and Select, and sells its own brand of products called Delect. It is also is the parent company of Caribbean Flavours and Fragrances Limited.
"Woodcats services the manufacturing industry providing pallets. Every manufacturer who produces goods needs to put it on a pallet. If fitted in perfectly," he said. "We are on a drive to diversify our revenue to ensure that we give our shareholders greater value."
Woodcats will add about $450 million to the annual $6.7 billion that Derrimon's group operations generate, and grow its workforce by 74 to 540. Cotterell also said the business was profitable.
Collings will remain with Woodcats during a transitional period ending in February 2019. "Woodcats has been an important part of my life for almost two decades, but the sale to Derrimon will give me the opportunity to devote more time and energy to my family and my faith," he said.
The other members of the senior management team, General Manager Peter Douglas, and Assistant General Manager Stephen Collings, will stay on beyond to help the company beyond the transition.