TIDMVCP
RNS Number : 3881U
Victoria PLC
24 October 2017
24 October 2017
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Acquisition of
Ceramiche Serra S.p.A.
Further Expansion in Hard Flooring
Victoria PLC, (LSE: VCP) the international designers,
manufacturers and distributors of innovative flooring, is pleased
to announce it has agreed to acquire Italian ceramic flooring
manufacturer, Ceramiche Serra S.p.A. ("Serra") (the "Acquisition"),
for cash consideration of up to EUR56.5 million (GBP50.4 million)
(the "Total Consideration"), net of cash acquired as part of the
Acquisition, to be funded from the Company's cash reserves and
existing debt facilities.
EUR36.5 million (GBP32.6 million) of the Total Consideration is
to be paid on completion, with the balance of EUR20.0 million
(GBP17.8 million) (the "Contingent Consideration") to be paid over
the next four years, subject to the business meeting annual targets
in earnings before interest, tax, depreciation and amortisation
("EBITDA").
The Acquisition will be immediately and significantly earnings
accretive on completion.
Serra, operating from sites in Serramazzoni, Sassuolo (near
Bologna), the heart of the Italian ceramics industry, manufactures
ceramic flooring, which is sold domestically and exported
internationally. It sells to a combination of wholesalers, retail
groups, and independent stores throughout Continental Europe, North
America, and the Far East.
The Acquisition marks Victoria's first move into the ceramic
flooring market, which is the largest flooring sector in the world,
representing over 60% of flooring sold globally and 30% of flooring
sold in Europe. Acquiring Serra therefore opens a large new market
to Victoria. The Board believes that there is significant
opportunity for further acquisitions in the sector, which should
result in a number of commercial, operational and financial
synergies - creating additional value for Victoria's shareholders
in the medium term.
In line with Victoria's acquisition criteria, the management
team at Serra have committed to running the business as part of
Victoria for a minimum period of four years and continuing to
develop its growth.
For the year ended 31 December 2016, Serra generated audited
revenues of EUR28.2 million (GBP25.2 million), EBITDA of EUR10.5
million (GBP9.4 million), and EBIT of EUR10.0 million (GBP8.9
million). Assuming the Contingent Consideration is paid in full,
the Acquisition would represent a multiple of 5.4x FY2016
EBITDA.
Completion of the Acquisition is subject to customary conditions
and is expected to take place in December 2017.
On completion Victoria's net debt to EBITDA ratio(1) will remain
less than 2.0x, which the Board believe is a very comfortable level
- especially given the Group's high level of cash generation - and
well within Victoria's stated acceptable level of debt.
Geoff Wilding, Chairman of Victoria PLC, commented:
"Serra is a very important acquisition for us and one which
reinforces our strategy of targeting earnings enhancing
acquisitions to expand our business, in addition to our focus on
organic growth. It will make an immediate positive contribution to
Victoria's performance whilst diversifying our market exposure.
Post-completion, nearly 40% of Victoria's earnings will come from
outside the UK - continuing our transformation into a genuinely
international flooring business.
"Shareholders will recall that we signalled our intention to
expand into hard flooring some 12 months ago and subsequently
acquired our first hard-flooring business, Australian
manufacturer/distributor Dunlop Flooring, in January of this year.
Since then we have conducted extensive due diligence on the sector
in Europe and explored a multitude of potential opportunities, as
well as recruiting a senior, director-level hard flooring expert in
May of this year. Given this planning and preparatory work, Serra
is the first of a number of acquisitions we expect to make in the
ceramic flooring sector.
It has been some eight months since our last acquisition,
Avalon/Grass Inc in the Netherlands, which has now been fully
integrated within Victoria and is contributing to our performance.
Our strategy of achieving scale through acquisitions and using that
scale to extract operational synergies continues to deliver value
for the Group and we look forward to developing the Serra business
as part of Victoria."
Strategic rationale for the Acquisition
The acquisition of Serra continues Victoria's successful
strategy of growing its business with earnings-enhancing
acquisitions, and using scale and the Group's industry expertise to
drive further increases in profits via cost savings and revenue
growth. The Board believes that Serra is an excellent strategic
acquisition in line with the Group's stated intention to further
develop its hard flooring business. Some of the reasons for this
view are set out below:
-- Geographic diversification. Serra does not currently sell
into the UK, and following completion, almost 40% of Victoria's
earnings will come from outside the UK. This also creates an
opportunity to introduce Serra's product into the UK.
-- Ceramics is the largest flooring sector in the world. 62% of
the 12.5 billion sqm of flooring sold globally each year, and 30%
of all the flooring sold in Europe, is ceramic. There is
significant opportunity for further acquisition-driven growth and
we have already identified a number of suitable targets. These
additional acquisitions will provide significant opportunity for a
number of commercial, operational and financial synergies, which
are expected to create further value for Victoria's shareholders -
just as it has done successfully in the carpet sector.
-- Serra has invested in productivity-enhancing technology,
resulting in fewer than 61 employees producing 10.5 million sqm of
ceramic flooring per annum.
-- The existing management team, which is highly regarded by the
industry, will remain with the business for a minimum of four years
providing continuity.
-- Like all companies acquired by Victoria, Serra will continue
to operate with a significant degree of autonomy, while benefiting
from the synergies of being part of a much larger group in its
ongoing drive for profitable growth.
-- The Board does not envisage significant integration costs arising from the Acquisition.
As such, the Acquisition is expected to be immediately and
significantly earnings-enhancing and opportunities to improve
margins and revenues will be pursued at the earliest
opportunity.
On completion, the enlarged Group will have approximately 1,800
employees and operate from more than ten sites in the UK, five in
Australia, two in the Netherlands, one in Belgium and two in
Italy.
Notes:
1 Leverage as defined by banking covenants, which uses adjusted
EBITDA calculated on a 12-month historical basis including
annualised figures from acquisitions.
2. Exchange rate: GBP1:EUR1.12
- Ends -
For more information contact:
Victoria PLC
Geoff Wilding, Chairman
Philippe Hamers, Group Chief Executive +44 (0) 1562
Michael Scott, Group Finance Director 749 300
Cantor Fitzgerald Europe (Nominated Adviser and Broker)
Rick Thompson, Phil Davies, Will Goode
(Corporate Finance)
Mark Westcott, Casper Shand-Kydd, Alex Pollen +44 (0) 20 7894
(Sales) 7000
+44 (0) 203 207
7800
Berenberg (Joint Broker)
Ben Wright, Mark Whitmore
(Corporate Broking)
+44 (0) 20 7220
finnCap (Joint Broker) 0500
Matt Goode, Grant Bergman
(Corporate Finance)
Tim Redfern
(Corporate Broking)
Buchanan Communications (Financial PR) +44 (0) 20 7466
Charles Ryland, Victoria Hayns, Madeline Seacombe 5000
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQEAKEDALNXFFF
(END) Dow Jones Newswires
October 24, 2017 02:00 ET (06:00 GMT)
Victoria (LSE:VCP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Victoria (LSE:VCP)
Historical Stock Chart
From Apr 2023 to Apr 2024