Mpac Group PLC Acquisition of Switchback Group, Inc. (4009Y)
09 September 2020 - 4:00PM
UK Regulatory
TIDMMPAC
RNS Number : 4009Y
Mpac Group PLC
09 September 2020
9 September 2020
Mpac Group plc
("Mpac" or the "Company")
Acquisition of Switchback Group, Inc.
Mpac Group plc (AIM: MPAC) a global leader in high speed
packaging and automation solutions is pleased to announce that it
has acquired the entire issued share capital of Switchback Group,
Inc. ("Switchback"), a USA based supplier of packaging machinery
and automation solutions to the food, beverage and healthcare
markets (the "Acquisition"). The Board expects the Acquisition to
be immediately earnings enhancing.
The initial consideration for Switchback is $13.0 million,
payable in cash. Further earn-out consideration of up to $2.0
million may become payable depending on performance, further
details of which are set out below. The initial consideration for
the Acquisition has been financed from the Group's existing cash
resources. Following the Acquisition, the Group will maintain a
strong balance sheet with a net cash position and an undrawn
GBP10.0 million revolving credit facility.
Background to and rationale for the Acquisition
Switchback was founded in 2006 and is a provider of packaging
machinery and automation solutions to the food, beverage and
healthcare markets with a particular strength in the high growth
craft brewing industry, benefiting from the shift towards increased
use of recyclables, aluminium cans, and cardboard packaging.
Switchback is based near Cleveland, Ohio, USA and employs 45
staff.
The Acquisition represents a compelling fit with Mpac's
strategic intent of being a market leader in the provision of
full-line packaging solutions for the pharmaceutical, healthcare
and food and beverage sectors.
The range of products offered by Switchback gives further
breadth and depth to Mpac's cartoning and end of line solutions.
Switchback will provide a platform to further build our business in
the USA giving access to a wider customer base and the opportunity
to provide existing customers with a wider range of productivity
solutions as the industry trends towards lower volumes and higher
variety.
Mpac will continue to support Switchback's strategic growth
plans and talented staff, providing access to the group resources,
global sales and service network to leverage growth opportunities
in Mpac's existing core markets of healthcare and food.
The unaudited financial statements of Switchback for the year to
31 December 2019 showed revenue of $14.2 million and profit before
tax of $2.1 million. Unaudited net assets at the same date were
$4.4 million including net cash of $4.9 million.
Terms of the Acquisition
Mpac has acquired the entire issued share capital of Switchback
for an initial consideration of $13.0 million, on a cash-free,
debt-free basis, to be paid in cash, subject to customary
adjustments for working capital. In addition, earn-out
consideration of up to $2.0 million will be paid in two tranches of
up to $1.0 million subject to the achievement by Switchback of
certain performance criteria based on EBITDA generation for each of
the 12-month periods ending on 30 September 2021 and 30 September
2022.
The President of Switchback, Dave Shepherd, previously a
shareholder, will remain with the business to continue the next
phase of its growth strategy. The acquisition of Switchback is
expected to deliver sales and service synergies through the
utilisation of Mpac's wider sales and service resources in North
America and Mpac's global footprint. Switchback's facility in Ohio
will provide a US sales and service presence for Mpac's existing
customers in the USA.
Tony Steels, Chief Executive of Mpac, commented:
"The acquisition of Switchback represents another key stage in
the strategic development of Mpac, providing a strong USA
footprint, together with a great range of products, talented
employees that have demonstrated entrepreneurial growth to become
market leaders with embedded customer relationships.
I am very excited by the opportunities presented by bringing
Switchback into the Mpac Group, providing the resources to support
the continued growth and the improved overall Mpac customer
proposition.
Switchback's performance during the COVID pandemic has been
strong with a good orderbook, demonstrating the high quality of the
business."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No. 596/2014
For further information, please contact:
Mpac Group plc Tel: +44 (0)24 7642 1100
Tony Steels, Chief Executive
Will Wilkins, Group Finance Director
Shore Capital (Nominated Advisor & Broker) Tel: +44 (0)20
7468 7923
Patrick Castle
Edward Mansfield
Sarah Mather
Hudson Sandler Tel: +44 (0)20 7796 4133
Nick Lyon
Nick Moore
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END
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