TIDMNXR
RNS Number : 1655L
Norcros PLC
11 May 2022
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
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WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE
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RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE
OR DISPOSE OF ANY SECURITIES IN NORCROS PLC OR ANY OTHER ENTITY IN
ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS
DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION
WITH, ANY INVESTMENT DECISION IN RESPECT OF NORCROS PLC.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE UK VERSION OF EU REGULATION 596/2014, WHICH
FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL)
ACT 2018 ("MAR").
11 May 2022
Norcros plc ("Norcros" or the "Company")
Proposed Acquisition of Grant Westfield
Acquisition accelerates Norcros' strategy to expand its
bathroom
product offer through Grant Westfield's market leading
position
Norcros, a market leading supplier of high quality and
innovative bathroom and kitchen products, is pleased to announce
that it has conditionally agreed to acquire Granfit Holdings
Limited ("GHL" and, together with its subsidiary undertakings,
"Grant Westfield"), from the Sellers, for an enterprise value of
GBP80 million with an additional potential earnout of up to GBP12
million based on certain performance criteria (the "Acquisition").
Grant Westfield is a market leading designer, manufacturer and
supplier of waterproof bathroom wall panels in the UK.
The Acquisition is expected to be double digit earnings
enhancing in the first full financial year post completion of the
transaction. The Acquisition will be funded from the Company's debt
facilities and the proceeds of a proposed placing of new ordinary
shares in the Company, to raise approximately GBP18 million (the
"Placing"). The Placing will partially fund the Acquisition and
also ensure that the Group maintains a strong balance sheet to
continue to pursue its organic and acquisitive growth strategy.
The Placing is being conducted through an accelerated
bookbuilding process, which will be launched immediately following
the release of a separate announcement relating to the Placing.
Numis Securities Limited ("Numis") is acting as sole bookrunner in
connection with the Placing. The Company and Numis have today
entered into a sponsor and placing agreement with respect to the
Placing and the Acquisition (the "Sponsor and Placing
Agreement").
The Acquisition constitutes a Class 1 transaction under the
Financial Conduct Authority's (the "FCA") Listing Rules and is
therefore conditional upon, among other things, the approval of the
Company's shareholders at the General Meeting, which is expected to
be held on 30 May 2022, and the Sponsor and Placing Agreement
having become unconditional. Further details of the General Meeting
and the Acquisition will be set out in a circular that is expected
to be sent to the Company's shareholders tomorrow (the "Circular").
Subject to satisfaction or waiver of all conditions to the
Acquisition, Completion is expected to occur on 31 May 2022
following the General Meeting.
Transaction Highlights
-- The Acquisition is consistent with Norcros' strategy to expand its bathroom product offer
o Complementary to the Group's existing portfolio of products
and brands, represents a rare opportunity to add a growing, market
leading, profitable, UK focused and well positioned business to its
existing portfolio
o Broadens the Group product portfolio towards the aim of
providing a 'one stop shop' for bathrooms across Norcros' existing
distribution channels
o Increased capability to leverage the Group's products into new
housing and modular markets
o Ability to leverage Norcros' expertise to drive operational
efficiency gains
-- Leading, differentiated and premium product in an attractive growth market
o The UK bathroom and shower panel market is a growing segment
of the broader UK bathroom wall coverings market, which the Board
believes represented approximately 30 per cent. of the estimated
GBP330 million market in 2021
-- Grant Westfield has a market share of approximately 12 per
cent. of the UK bathroom wall coverings market and approximately 40
per cent. of the UK bathroom shower and panel market
o Continued growth in domestic bathroom expenditure and new
housebuilding spend expected to remain robust
o Relative to alternatives, panels are easier and faster to
install and are a high quality product that is waterproof and
durable
o Low lifetime cost, including low and cost effective
maintenance
-- Attractive returns from a profitable and cash generative
business model operating in preferred channels
o The Acquisition price represents a multiple of 7.9x Grant
Westfield's adjusted EBITDA for the year ended 31 December 2021
o The Acquisition is expected to be double digit earnings
enhancing in the first full financial year post Completion
o Return on invested capital expected to be in excess of
Norcros' cost of capital in the first full financial year post
Completion
o The Company will maintain a conservative capital structure and
expects pro forma 2022E post IFRS-16 leverage to be approximately
1.0x
-- Significant growth opportunities
o Ongoing market penetration based on attraction of wall panels
through new product development
o Scope to increase exposure to UK new housing (private and
social), modular and DIY channels
o Geographic expansion of Grant Westfield in the UK and
Europe
o Utilisation of existing manufacturing capacity
Grant Westfield track record
Grant Westfield's audited financials for the 12 months ended 31
December 2019, 31 December 2020 and 31 December 2021 are shown
below:
For the year ended 31 December,
GBPm [1]
----------------------------------- ------------------------
2019 2020 2021
---------------------------- ----------- ------ ----------
Revenue 34.2 32.3 42.2
Adjusted EBITDA 5.8 6.5 10.1
Margin % 17% 20% 24%
---------------------------- ----------- ------ ----------
Grant Westfield has a strong track record of organic revenue and
EBITDA growth and demonstrated a resilient performance through
COVID-19. EBITDA margin improvement has been driven by enhanced
operational gearing through new product development and strong
trading. Grant Westfield is highly cash generative (approximately
100% [2] cash conversion average FY19-21) due to low capital
intensity.
As at 31 December 2021, Grant Westfield had gross assets of
GBP52.7 million.
Conditions to the Acquisition
Completion is conditional upon:
-- the shareholders of the Company passing the Resolution to
approve without amendment the purchase by the Purchaser of the
shares in GHL (on the terms and subject to the conditions of the
Acquisition Agreement) on or before 30 June 2022 (or such later
date as may be agreed);
-- the Sponsor and Placing Agreement not having been terminated
or rescinded and having become unconditional in all respects
(including as to Admission);
-- the Facilities Agreement not having been terminated or
rescinded and such amount as the Purchaser requires to borrow under
the Facilities Agreement in order to finance that part of the
provisional consideration due to the Sellers on Completion that is
not being funded from the Purchaser's cash resources, including
those raised pursuant to the Placing, being available for draw-down
by the Purchaser under the Facilities Agreement; and
-- there being no material adverse change in the business or operations of Grant Westfield
Commenting on the acquisition, Nick Kelsall, Chief Executive
Officer, said:
'The acquisition of Grant Westfield with its premium Multipanel
brand and market leading position is a strategically compelling
addition to the Group, broadening our bathroom product offer. Grant
Westfield's focus on design, new product development and its
standard of customer service will significantly enhance the Group's
portfolio. I am looking forward to working with the Grant Westfield
Managing Director, Sarah Law, and her team as we work together on
the next phase of growth.'
Also commenting on the acquisition, Sarah Law, Managing Director
of Grant Westfield, said:
'We are excited to be joining the Norcros family. There are
clear opportunities to grow together and, as a leader in the
waterproof panel market, our Multipanel brand will be very much at
home with their existing bathroom brands. This represents an
exciting opportunity to accelerate our successful strategic growth
plan in the UK and internationally through new products and market
penetration.'
Expected timetable
Time and date
Announcement of the Acquisition and the Placing 11 May 2022
Announcement of results of Placing through Regulatory Information Service 12 May 2022
Publication and posting of the Circular 12 May 2022
Admission and commencement of dealings in Placing Shares 8.00 a.m. on 16 May 2022
Placing Shares credited to CREST accounts (uncertificated holders only) as soon as practicable after Admission
Despatch of definitive share certificates in respect of the Placing Shares
(where applicable) no later than 23 May 2022
Latest time and date for receipt of Forms of Proxy/CREST Proxy
Instructions 10.00 a.m. on 26 May 2022
General Meeting 10.00 a.m. on 30 May 2022
Date of Completion expected on 31 May 2022
For further information please contact:
Norcros plc Tel: 01625 547 700
Nick Kelsall, Chief Executive Officer
James Eyre, Chief Financial Officer
Numis Tel: 0207 260 1000
Richard Thomas
Jonathan Wilcox
William Baunton (ECM)
George De Felice
Hudson Sandler Tel: 0207 796 4133
Charlie Jack
Sophie Miles
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this Announcement is being made on
behalf of the Company by Richard Collins, Group Counsel and Company
Secretary. In addition, market soundings (as defined in MAR) were
taken in respect of the Placing with the result that certain
persons became aware of inside information (as defined in MAR), as
permitted by MAR. This inside information is set out in this
Announcement. Therefore, those persons that received inside
information in a market sounding are no longer in possession of
such inside information relating to the Company and its
securities.
IMPORTANT NOTICES
This Announcement is not being distributed by, nor has it been
approved for the purposes of section 21 of the Financial Services
and Markets Act 2000, as amended ("FSMA"), by, a person authorised
under FSMA. This Announcement is being distributed to persons in
the United Kingdom only in circumstances in which section 21(1) of
FSMA does not apply.
Persons (including without limitation, nominees and trustees)
who have a contractual right or other legal obligations to forward
a copy of this Announcement should seek appropriate advice before
taking any action.
This Announcement has been issued by, and is the sole
responsibility of, the Company. No representation or warranty,
express or implied, is or will be made by Numis, or by any of its
partners, directors, officers, employees, advisers, consultants,
affiliates or agents as to or in relation to, the accuracy or
completeness of this Announcement or any other written or oral
information made available to any interested person or its
advisers, and any liability therefore is expressly disclaimed. None
of the information in this Announcement has been independently
verified or approved by Numis or any of its partners, directors,
officers, employees, advisers, consultants, affiliates or agents.
Save for any responsibilities or liabilities, if any, imposed on
Numis by FSMA or by the regulator regime established under it, no
responsibility or liability is accepted by Numis or any of its
partners, directors, officers, employees, advisers, consultants,
affiliates or agents for any errors, omissions or inaccuracies in
such information or opinions or for any loss, cost or damage
suffered or incurred howsoever arising, directly or indirectly,
from any use of this Announcement or its contents or otherwise in
connection with this Announcement or from any acts or omissions of
the Company in relation to the Placing.
This Announcement is not for publication or distribution,
directly or indirectly, in or into the United States of America.
This Announcement is not an offer of securities for sale into the
United States. The securities referred to herein have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration. No
public offering of securities is being made in the United
States.
Numis, which is authorised and regulated in the United Kingdom
by the FCA, is acting solely for the Company and no-one else in
connection with the transactions and arrangements described in this
Announcement and will not regard any other person (whether or not a
recipient of this Announcement) as a client in relation to the
transactions and arrangements described in this Announcement.
Neither Numis nor its partners, directors, officers, employees,
advisers, consultants, affiliates or agents are responsible to
anyone other than the Company for providing the protections
afforded to clients of Numis or for providing advice in connection
with the contents of this Announcement or for any other matters
referred to herein.
Cautionary statements
This Announcement may contain and the Company may make verbal
statements containing "forward-looking statements" with respect to
certain of the Company's plans and its current goals and
expectations relating to its future financial condition,
performance, strategic initiatives, objectives and results.
Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "seek", "may", "could", "outlook" or other words
of similar meaning. By their nature, all forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances which are beyond the control of the Company. As a
result, the actual future financial condition, performance and
results of the Company may differ materially from the plans, goals
and expectations set forth in any forward-looking statements. Any
forward-looking statements made in this Announcement by or on
behalf of the Company speak only as of the date they are made. The
information contained in this Announcement is subject to change
without notice and, except as required by applicable law or
regulation (including to meet the requirements of the Listing
Rules, MAR and/or FSMA), the Company expressly disclaims any
obligation or undertaking to publish any updates or revisions to
any forward-looking statements contained in this Announcement to
reflect any changes in the Company's expectations with regard
thereto or any changes in events, conditions or circumstances on
which any such statements are based. Statements contained in this
Announcement regarding past trends or activities should not be
taken as representation that such trends or activities will
continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
Announcement.
No statement in this Announcement is intended to be a profit
forecast and no statement in this Announcement should be
interpreted to mean that earnings per share of the Company for the
current or future years would necessarily match or exceed the
historical published earnings per share of the Company.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into or forms part of this Announcement.
Definitions
" Acquisition " the proposed acquisition of the entire issued share capital of GHL pursuant to
the Acquisition
Agreement
" Acquisition Agreement " the agreement dated 11 May 2022 between the Sellers, the Purchaser and the
Company pursuant
to which the Purchaser conditionally agreed to acquire the entire issued share
capital of
GHL
" Admission " the admission of the Placing Shares by the FCA to listing on the premium
segment of the Official
List and by the London Stock Exchange to trading on the Main Market
" Announcement " this announcement
" Board " the board of directors of the Company for the time being
"Circular" the circular which is expected to be sent to the Company's shareholders
tomorrow
" Companies Act " or "Act" the Companies Act 2006, as amended
" Company " or "Norcros" Norcros plc
" Completion " completion of the Acquisition in accordance with the terms of the Acquisition
Agreement
" Directors " the directors of the Company or the directors for the time being of the
Company, as the context
requires, and "Director" shall be construed accordingly
" Facilities Agreement " the agreement relating to the Company's revolving credit facilities
" FCA " the UK Financial Conduct Authority
" Form of Proxy " the form of proxy for use in connection with the General Meeting
" FSMA " the Financial Services and Markets Act 2000, as amended
" General Meeting " the general meeting of the Company proposed to be held at the offices of
Eversheds Sutherland
(International) LLP, Two New Bailey, 6 Stanley Street, Manchester, M3 5GX at
10.00 a.m. on
30 May 2022 to approve the Resolution, the notice of which will be set out at
the end of the
Circular
" GHL " Granfit Holdings Limited, incorporated in Scotland with registration number
SC021183
" Grant Westfield " GHL and its subsidiaries and subsidiary undertakings, and, where the context
requires, its
associated undertakings
" Group " the Company and its subsidiaries and its subsidiary undertakings and, when the
context requires,
its associated undertakings from time to time
" IFRS " International Financial Reporting Standards, as adopted by the EU
" Listing Rules " the rules of the FCA relating to the admission to the Official List made by
the FCA under
section 73A(2) of FSMA
" London Stock Exchange " London Stock Exchange plc or its successor(s)
" Main Market " the London Stock Exchange's main market for listed securities
" Notice of General Meeting " the notice convening the General Meeting which is set out at the end of the
Circular
" Numis " Numis Securities Limited of 45 Gresham Street, London, EC2V 7BF
" Official List " the Official List of the FCA
" Ordinary Shares " the ordinary shares of GBP0.10 in the capital of the Company from time to time
" Placing " the placing of the Placing Shares by Numis in accordance with the terms of the
Sponsor and
Placing Agreement
" Placing Shares " the new Ordinary Shares which are to be issued pursuant to the Placing
" Purchaser " Norcros Group (Holdings) Limited, a wholly-owned subsidiary of the Company
" Regulatory Information Service " one of the regulatory information services authorised by the FCA to receive,
process and disseminate
regulatory information from listed companies
" Resolution " the resolution set out in the Notice of General Meeting
" Sellers " Iain MacDonald and Calmeg Limited
" Sponsor and Placing Agreement " the sponsor and placing agreement dated 11 May 2022 between the Company and
Numis, details
of which will be set out in the Circular
" subsidiary undertaking " the meaning given to it in the Companies Act
[1] Grant Westfield unaudited financial information
[2] Cash conversion defined as cash generated from operations /
adjusted EBITDA
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