TIDMVCP
RNS Number : 8009R
Victoria PLC
14 December 2016
14 December 2016
Victoria PLC
('Victoria', the 'Company', or the 'Group')
Acquisition of
Dunlop Flooring
Further Expansion in Australia
Victoria PLC, (LSE: VCP) the international designers,
manufacturers and distributors of innovative floor coverings, is
pleased to announce it has agreed to acquire the business and
assets of Dunlop Flooring ("Dunlop") (the "Acquisition"), the
Australian underlay and hard wood flooring manufacturer and
distributor, for a cash consideration of A$34 million
(GBP20million), which will be funded from the Company's cash and
existing debt facilities.
The Acquisition will be immediately and significantly earnings
accretive on completion.
Dunlop, operating from sites in Sydney and Melbourne, is a
substantial manufacturer and distributor of flooring underlay in
Australia, with extremely high and long-standing brand awareness.
The business also designs and distributes a range of branded wood
and vinyl flooring products. It sells to a combination of
wholesalers, retail groups, and independent stores throughout
Australia.
Dunlop Flooring has been acquired from Australian company,
Pacific Brands Limited, itself recently the subject of a successful
takeover offer from US-listed Hanesbrands Inc.. Completion of the
acquisition is subject to customary conditions precedent and is
expected to take place during the quarter ending March 2017. In
line with our acquisition criteria, the strong management team at
Dunlop are committed to staying and running the business as part of
Victoria.
For the year ended 30 June 2016, Dunlop Flooring generated
unaudited revenues of A$50.8 million (GBP30.0 million), EBITDA of
A$6.0 million (GBP3.5 million), and EBIT of A$4.9 million (GBP2.9
million)(1) . On completion Victoria's net debt to EBITDA ratio(2)
will be less than 2x, a very comfortable level - especially given
the Group's cash generation - and well within Victoria's stated
acceptable level of debt.
(1) All figures adjusted for estimated changes in cost base once separated from Pacific Brands
(2) Net debt / EBITDA as measured in relation to the Group's
bank facility covenants
Geoff Wilding, Chairman of Victoria PLC, commented:
"Dunlop is another important and strategic acquisition for us,
and one which reinforces our strategy of targeting
earnings-enhancing acquisitions in addition to organic growth. It
will make a positive contribution to Victoria's profits whilst
diversifying our market exposure. Post-completion, nearly 30% of
Victoria's earnings will come from Australia - a dynamic and
growing market and a strong economy.
Shareholders will recall that Victoria acquired UK underlay
manufacturer, Interfloor, in September 2015 and we have been highly
effective in improving earnings over the last 12 months. We
anticipate a similar outcome with Dunlop.
It has been some 16 months since our last acquisition in
Australia, Melbourne-based Quest Carpets, which has now been fully
integrated within Victoria and is contributing materially to our
outstanding performance in the Australian market. Our strategy of
achieving scale through acquisitions and using that scale to
extract genuine synergies continues to deliver value for the Group
and we look forward to developing the Dunlop business as part of
Victoria."
Strategic rationale for the Acquisition
The Acquisition 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 growing revenues. The
Board believes that Dunlop Flooring is an excellent strategic fit
with Victoria's existing business in Australia and will have strong
long term growth prospects as part of the Group.
The enlarged Group now has approximately 1,800 employees and
operates from ten sites in the UK, and five in Australia.
Additionally, there is significant opportunity for a number of
commercial, operational and financial synergies, which are expected
to create value for Victoria's shareholders:
-- Additional exposure to the dynamic Australian market -
Victoria's like-for-like Australian revenues have grown more than
9% in the last six months - is valuable market and currency
diversification. Dunlop has been experiencing similar revenue
growth.
-- The existing management team, which is highly regarded by the
industry, will remain with the business providing continuity.
-- Like all companies acquired by Victoria, Dunlop Flooring 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.
-- In addition, the Board does not envisage significant
integration costs arising from the Acquisition.
As such, the Acquisition is expected to 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 is A$34 million (GBP20
million) on a debt-free, cash-free basis, representing a multiple
of 5.7x FY2016 EBITDA. The entire purchase price will be funded
from cash and the Group's existing bank facilities.
Exchange rate: GBP1:A$1.70
- 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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