The group has also announced a placing to raise £2.8m at 1.5p per share. The funds will pay for half the cost of the acquisition, payable on completion, with the balance providing additional working capital.

ETSC, Ethiopia's largest tannery, has been operated under Pittards' supervision since August 2005 in return for a monthly management fee and royalty payments.

Pittards says ETSC is operating profitably and it intends to transfer more volume production there from its UK site in Yeovil, freeing up resources for more technologically advanced, higher value-added leathers.

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