Boparan - comment

The UK competition authority (CMA) will give its decision on the acquisition of poultry farming and processing assets of Banham by 25 March. The assets are owned by the Boparan family private office, not the bond issuing entity so the transaction and the curent investigation does not impact liquidity at Boparan.
Our modelling points to a price of around £15m paid for Banham but, since then feed and power costs have spiralled lowering the valuation. The CMA could still ignore the pricing dislocation as a temporary issue vs an overlarge market share. A phase 2 enquiry could force Ranjit Boparan to divest some of the poultry capacity held in the family’s portfolio with the process taking up to six months.

- Our Boparan email last week showed without an increase in poultry prices (albeit modest) by the supermarkets that Boparan itself could see a liquidity squeeze in the next couple of quarters. We remain long 1-year CDS ahead of the results call on 24th March which may challenge our model with some positive news on pricing.