TIDMESNT
RNS Number : 1746I
Essentra plc
01 December 2022
ESSENTRA PLC
ACQUISTION OF THE WIXROYD GROUP
Essentra plc ("Essentra", the "Company" or the "Group"), a
leading global provider of essential components and solutions, is
pleased to announce the acquisition of Wixroyd Holdings Limited
(the "Wixroyd Group"), a leading UK supplier of industrial parts
for the engineering sector, for an initial consideration of
GBP29.5m.
This is the first acquisition to be announced since Essentra
outlined its new strategy as a pure-play components business and
continues a successful track record of acquisitions in the
components business over the last ten years. The acquisition of the
Wixroyd Group expands Essentra's capabilities in hardware
components and creates significant additional cross-selling
opportunities across a range of Essentra's current end markets with
the initial focus on Essentra's customer base in Continental
Europe.
The acquisition fully supports the Company's strategy, as set
out at the recent Capital Markets Event, to accelerate and
supplement organic growth through value enhancing bolt-on
acquisitions that expand its product, market and geographic
breadth. The acquisition is expected to be accretive to adjusted(1)
EPS in the first full year of ownership, with ROIC(2) expected to
exceed 15% within three years, and delivers profit margins
significantly ahead of the current Group level.
Based in Chichester, the Wixroyd Group comprises three leading
UK brands of differentiated mechanical components. With a 70 year
history, it has earned a reputation for high quality components
delivered with an excellent level of service to its 9,000
customers. The Wixroyd Group manufactures and supplies one of the
broadest ranges of innovative mechanical components, with an
extensive portfolio of over 100,000 products available across the
online range providing solutions for product design and engineering
challenges.
The consideration payable for the Wixroyd Group comprises an
initial cash consideration of GBP29.5m and up to GBP7.0m deferred
earn-out consideration on a cash-free, debt-free basis. For the
year ended 31 December 2021, the Wixroyd Group generated revenue of
GBP10.4m, and EBITDA of GBP2.6m. Based on the Wixroyd Group
achieving its forecast performance for the year ended 31 December
2022, the initial consideration would represent an acquisition
multiple of c.9x EBITDA.
In determining the base case the Board expects a similar EBITDA
performance in 2023 given the macro-economic environment. The
deferred earn-out consideration is conditional on achieving certain
performance criteria for the 12 month period commencing 1 January
2023, which would exceed the base case. The Board expects revenue
and purchasing synergies arising from the acquisition to materially
benefit performance from 2024 onwards.
The initial acquisition consideration, and any subsequent
conditional consideration will be financed from Essentra's existing
cash flow and debt facilities. Following the acquisition Essentra's
balance sheet will remain strong, with the proforma net debt
position of the continuing components business representing
significantly less than 1.0x EBITDA, providing the capacity to
drive further organic and inorganic growth ambitions.
Scott Fawcett, Chief Executive Designate of Essentra plc,
commented:
"I am delighted to announce the acquisition of the Wixroyd
Group, which will further strengthen Essentra's expertise and
leading product portfolio to the benefit of our customers. Our plan
is to launch Wixroyd products to Essentra's Continental European
customers, further strengthening the breadth of our offer.
This transaction is a great example of the Components' strategy
in action as we leverage our strong balance sheet and the
significant opportunities for product expansion in highly
fragmented markets to accelerate our potential as a pure-play
components business."
Marcus Iafrate, MD of the Wixroyd Group, and Anthony Iafrate,
Chair of the Wixroyd Group, commented:
"The achievements of the Wixroyd team, and the role our products
have played in enabling design engineers across the UK to innovate
and solve countless engineering challenges, has been a great source
of pride for both of us as we have guided the Wixroyd Group over
the last 30 years.
The next phase in Wixroyd's development is hugely exciting. We
have seen substantial growth in our business, predominately in the
UK, and look forward to scaling this to a wider, more international
customer base, in the next phase of our development. The culture of
Essentra Components places the same importance on people as we have
at Wixroyd, which, along with the excellent product and customer
fit, makes this an exciting time in our company's history."
Notes:
1. The term adjusted excludes the impact of amortisation of
acquired intangible assets and adjusting items
2. ROIC is calculated as adjusted operating profit expressed as
a percentage of invested capital. Invested capital is defined as
initial consideration and capex investment, plus associated
acquisition transaction fees and integration costs
Investor enquiries: Media enquiries:
Essentra plc Tulchan Communications LLP
Claire Goodman, Group Investor Relations Olivia Peters
Manager Lisa Jarrett-Kerr
Jack Clarke, Chief Financial Officer Tel: +44 (0)20 7353 4200
Emma Reid, Head of Governance
Tel: +44 (0)1908 359100
Additional information
The acquisition constitutes a Class 2 transaction for the
purposes of the UK Financial Authority's Listing Rules. Total gross
assets excluding cash and goodwill as of 31 December 2021 were
GBP9.5m.
More information on Wixroyd Group can be found on its website at
https://www.wixroyd.com/en .
Cautionary forward-looking statement
This announcement contains forward-looking statements based on
current expectations and assumptions. Various known and unknown
risks, uncertainties and other factors may cause actual results to
differ from any future results or developments expressed or implied
by the forward-looking statement. Each forward-looking statement
speaks only as of the date of this announcement. The Company
accepts no obligation to revise or publicly update these
forward-looking statements or adjust them to future events or
developments, whether as a result of new information, future events
or otherwise, except to the extent legally required.
The release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and, therefore, any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. Any failure to
comply with these requirements or restrictions may constitute a
violation of the securities laws or regulations of any such
jurisdiction. This announcement has been prepared for the purposes
of complying with English law and the UK Listing Rules and the
information disclosed may not be the same as that which would have
been disclosed if this announcement had been prepared in accordance
with the laws and regulations of any jurisdiction outside of
England.
No profit forecasts or estimates
No statement in this announcement is intended as a profit
forecast or estimate for any periods.
Notes to Editors
About Essentra plc
Essentra plc is a FTSE 250 company and a leading global provider
of essential components and solutions. As a result of the
completion of the sale of Packaging to the Mayr-Melnhof Group, the
Group is now organised into two global divisions. Essentra focuses
on the light manufacture and distribution of high volume, enabling
components which serve customers in a wide variety of end-markets
and geographies.
Headquartered in the United Kingdom, Essentra's global network
extends to 32 countries and includes over 4,500 employees, 24
principal manufacturing facilities, 28 sales & distribution
operations and two research & development centres. For further
information, please visit www.essentraplc.com .
Essentra Components
Essentra Components is a global market leading manufacturer and
distributor of plastic injection moulded, vinyl dip moulded and
metal items. Operating in 25 countries worldwide, 12 manufacturing
facilities and 23 sales & distribution centres serving c.80,000
customers with a rapid supply of low cost but essential products
for a variety of applications in industries such as equipment
manufacturing, automotive, fabrication, electronics, medical and
renewable energy.
Essentra Filters
Essentra Filters is the only global independent cigarette filter
supplier. Currently headquartered in Singapore, the division has 12
sites across nine countries, including two innovation centres,
providing a flexible infrastructure strategically positioned to
serve the tobacco sector. The business supplies a wide range of
value-adding high-quality innovative filters, packaging solutions
to the roll your own segment and analytical laboratory services for
ingredient measurement to the industry. Essentra's offering also
includes Heat Not Burn and e-cigarette solutions to the rapidly
evolving market for Next Generation Products. The division also
includes the Tear Tapes business, which is globally recognised as
the leading manufacturer and supplier of pressure-sensitive tear
tapes, that are largely used in the tobacco, e-commerce, food and
beverage and specialist packaging sectors.
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