The unnamed customer informed the producer of its plans to implement a single supplier strategy. As a result, Produce Investments will not be awarded a new supply contract once the existing agreement expires in August 2019.
Produce Investments expected that the supply volumes to its customer would be gradually phased out over a three-year period from the expiration of the existing agreement.
A spokesman for the company said: “While naturally disappointed with the outcome of this decision, this is part of the ordinary course of business in the sector in which the company operates.
‘Mitigate negative impact’
“The board will continue to work hard to drive new business and mitigate over time any negative impact this decision may have on the company’s operations.”
Produce Investments owns a number of potato growing and processing companies, including Swancote Foods, The Jersey Royal Company and Rowe Farming. It also is a supplier of fresh daffodils.
Last month, the company agreed to a £52.95m takeover offer by April 1983 Bidco, a Jersey company ultimately owned and controlled by funds managed by Promethean Investments.
Premium on stock
Bidco offered 193p in cash for each Produce Investments share, a 35.44% premium on the stock’s closing price of 142.50p on Monday 10 September.
Commenting on the offer, chief executive Angus Armstrong said: “This transaction will allow Produce Investments to move to a more suitable private market environment for a company of its size, thereby eliminating the regulatory burden, constraints and costs of maintaining a public listing.
“Existing management will continue to run the business and, along with them, I look forward to continuing to grow the business and serve our customers.”
Meanwhile, the UK has signed a deal that will allow the export of seed potatoes to China.