TIDMVCP
RNS Number : 4506L
Victoria PLC
03 October 2016
3 October 2016
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Acquisition of Ezi Floor
Further Earnings Enhancing Expansion
Victoria PLC, (LSE: VCP) the international designers,
manufacturers and distributors of innovative floor coverings, is
pleased to announce it has completed the acquisition of the
business and assets of UK underlay manufacturer, Ezi Floor ("Ezi
Floor") (the "Acquisition") for an initial cash consideration of
GBP6.5 million and deferred consideration of GBP6.5 million.
Additional contingent consideration is payable dependent on certain
financial targets being met over the next four years following
completion of the Acquisition.
The Acquisition will be immediately earnings accretive.
Ezi Floor benefits from a modern, well equipped, manufacturing
facility near Bradford, Yorkshire, and is an efficient manufacturer
and distributor of a range of underlay and underlay accessories for
both the residential and contract markets. It sells to wholesalers,
retail groups, and independent stores throughout the UK.
Ezi Floor has been acquired by the Company from a reorganised
group of companies and therefore no statutory financial information
for the business is available. However, the Board of Victoria
expects EBITDA of approximately GBP2.4 million for the year ended
31 March 2017. Total net assets acquired on completion were
approximately GBP5.1 million.
Geoff Wilding, Chairman of Victoria PLC, commented:
"We are delighted to announce the acquisition of Ezi Floor. It
is an efficient operation with very focussed management that will
stay with the business, and which is expected to make a positive
contribution to Victoria's profits. The business is highly-regarded
within the industry, fits very well with our growth strategy, and
delivers immediately accretive earnings.
We believe underlay to be a real opportunity and Victoria is
already actively looking at other opportunities in the underlay
sector. 12 months ago Victoria acquired underlay manufacturer
Interfloor. Since then, cross-selling opportunities - almost all
consumer carpet purchases require underlay - and purchasing
improvements as a result of the Group's scale have successfully and
significantly improved the earnings of that business.
The integration of our previous acquisitions has been completed,
and Victoria is already benefiting from our strategy of achieving
scale through acquisitions and we look forward to integrating Ezi
Floor and developing the business as part of Victoria."
Strategic rationale for the Acquisition
The Acquisition continues Victoria's strategy of growing its
business with earnings-enhancing acquisitions, and then using scale
to drive further increases in profits in order to return wealth to
shareholders. The Board believes that Ezi Floor presents an
excellent strategic fit with Victoria's existing business and will
have strong long term growth prospects as part of the Group.
The enlarged Group now has approximately 1,700 employees and
operates from 10 sites in the UK, and three in Australia.
There is significant opportunity for a number of commercial,
operational and financial synergies, which are expected to create
value for Victoria's shareholders:
-- Ezi Floor's manufacturing site is efficient, well-invested,
and has significant room for future expansion.
-- The existing trading relationship between the Group and Ezi
Floor is expected to continue to grow at an enhanced rate due to
Group cross synergies, driving further profitable growth.
-- Key management will remain with the business for a minimum term of four years.
-- In addition, the Board does not envisage significant
integration costs arising from the Acquisition.
As such, the Acquisition will be immediately earnings enhancing
and opportunities to improve margins and revenues will be pursued
at the earliest opportunity.
Key terms of the Acquisition
The consideration for the Acquisition comprises:
-- Initial cash consideration of GBP6.5m;
-- Deferred cash consideration of GBP6.5m, payable in annual instalments over four years;
-- Contingent cash consideration of a maximum of GBP6.5m, wholly
dependent on improved EBITDA over the next four years.
The total consideration (including the maximum contingent cash
consideration) represents a multiple of 5.5x expected average
annual EBITDA over the next four years.
The Acquisition is being funded from the Group's existing bank
facilities.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
- Ends -
For more information contact:
Victoria PLC
Geoff Wilding, Chairman
Michael Scott, Group Finance
Director +44 (0) 1562 749 300
Cantor Fitzgerald Europe (Nominated
Adviser and Broker)
Rick Thompson, Phil Davies,
Michael Reynolds (Corporate
Finance)
Mark Westcott, Casper Shand-Kydd
(Sales) +44 (0) 20 7894 7000
finnCap (Joint Broker)
Matt Goode, Grant Bergman
(Corporate Finance)
+44 (0) 20 7220 0500
Tim Redfern
(Corporate Broking)
Buchanan Communications (Financial
PR)
Charles Ryland, Victoria Hayns,
Jane Glover +44 (0) 20 7466 5000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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