TIDMVCP
RNS Number : 6524W
Victoria PLC
16 November 2017
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF
THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE
RESTRICTED AND ARE NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES,
AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH
THE SAME WOULD BE UNLAWFUL.
16 November 2017
Victoria PLC
("Victoria", the "Company", or the "Group")
Acquisition of Keraben Grupo S.A.
Vendor Placing and Firm Placing to raise GBP180 million
The Board of Victoria (LSE: VCP), the international designers,
manufacturers and distributors of innovative floorcoverings, is
pleased to announce that it has entered into an agreement to
acquire the entire issued share capital of Keraben Grupo S.A.
("Keraben"), a substantial European manufacturer of branded floor
and wall ceramic tiles, for a total consideration of EUR274.1
million (GBP246.5 million) (the "Consideration") from
Tensile-Keraben Holdings S.a.r.l. (an associated company of Tensile
Capital Management LLC) and the founding family (the "Vendors")
(the "Acquisition").
The Consideration is payable in cash on completion and will be
satisfied in part through a placing of 22,988,506 new Ordinary
Shares (consisting of 20,271,140 "Vendor Placing Shares" and
2,717,366 "Firm Placing Shares") at a price of 783 pence per
Ordinary Share (the "Placing Price") to raise gross proceeds of
approximately GBP180 million. The Vendor Placing Shares and Firm
Placing Shares have been placed by Cantor Fitzgerald Europe and
Berenberg, as Joint Bookrunners, with certain existing and new
institutional investors.
Subject to admission of the Vendor Placing Shares and the Firm
Placing Shares, the Acquisition is expected to complete today,
Thursday 16 November 2017.
Highlights
Acquisition
-- Keraben is a large, well-invested business with a strong
market reputation. It is led by a proven, established management
team which has successfully and consistently grown the business
over recent years, executing a clear strategy to drive continued
profitable growth.
-- The Acquisition is expected to be significantly accretive to
earnings per share for Victoria shareholders in the first full year
of ownership (even after accounting for the impact of the new
Ordinary Shares).
-- For the year ended 31 December 2016, Keraben generated
audited revenues of EUR118.3 million (GBP106.4 million), adjusted
EBITDA of EUR36.4 million (GBP32.7 million), and adjusted EBIT of
EUR27.5 million (GBP24.7 million). The Board expects that
normalised earnings should be about 10% higher for the year to 31
December 2017.
-- The Acquisition continues Victoria's drive into the European
hard flooring market, following the recently announced proposed
acquisition of Ceramiche Serra S.p.A. (which is expected to
complete in December 2017).
-- The Acquisition further enhances Victoria's international
reach and diversification of earnings.
-- In line with Victoria's acquisition criteria, the management
team at Keraben are financially incentivised to run the business as
part of Victoria for a minimum period of three years and continuing
to develop its growth.
The Placing
-- 20,271,140 Vendor Placing Shares and 2,717,366 Firm Placing
Shares have been placed at the Placing Price with certain existing
and new institutional investors, raising gross proceeds of GBP180
million.
-- The Vendor Placing will be used to part-fund the Acquisition,
with the balance of the Acquisition consideration (plus associated
transaction costs, taxes and other expenses) to be funded from a
new EUR178 million banking facility provided by the Company's
existing group of lenders.
-- The Firm Placing will be deployed in due course to part-fund
further carefully scrutinised acquisitions as the Company continues
to execute its strategy designed to create value for
shareholders.
-- The Vendor Placing and Firm Placing (together the "Placing")
are conditional upon admission of the Vendor Placing Shares and
Firm Placing Shares to trading on AIM ("Admission") by no later
than 8.00 a.m. today, Thursday 16 November 2017.
-- Cantor Fitzgerald Europe acted as Nominated Adviser, Joint
Bookrunner and Broker in relation to the Placing. Joh. Berenberg,
Gossler & Co KG acted as Joint Bookrunner and Broker in
relation to the Placing.
Geoff Wilding, Chairman of Victoria commented:
"We believe that Keraben is a high-quality addition to the
Group. Notwithstanding its further strong organic growth prospects,
the acquisition of Keraben will be materially earnings accretive in
the first year of ownership and continues to increase our
geographic diversity. Post-completion, over 50 per cent. of
Victoria's earnings will be generated from outside the UK -
continuing our transformation into a genuinely international
flooring business.
We are delighted by the level of support we have received from
both existing and new investors, with the placing oversubscribed by
a multiple of the funds sought."
For more information contact:
Victoria PLC
Geoff Wilding, Chairman
Philippe Hamers, Group Chief Executive
Michael Scott, Group Finance Director +44 (0) 1562 749 300
Cantor Fitzgerald Europe (Nominated Adviser,
Joint
Bookrunner and Broker)
Rick Thompson, Phil Davies, Will Goode
(Corporate Finance)
Caspar Shand Kydd, Alex Pollen (Equity
Sales) +44 (0) 20 7894 7000
Berenberg (Joint Bookrunner and Broker)
Ben Wright, Mark Whitmore (Corporate Broking)
+44 (0) 203 207 7800
Buchanan Communications (Financial PR)
Charles Ryland, Victoria Hayns, Madeline
Seacombe +44 (0) 20 7466 5000
About Victoria
Established in 1895 and listed since 1963 and on AIM since 2013
(VCP.L), Victoria PLC, is an international manufacturer and
distributor of innovative flooring products. The Group, which is
headquartered in Kidderminster, designs, manufactures and
distributes a range of carpet, underlay, LVT (luxury vinyl tile),
artificial grass and flooring accessories. Victoria has operations
in the UK, Belgium, the Netherlands and Australia and employs
approximately 1,800 people across 20 sites. Victoria is the UK's
largest carpet manufacturer and the second largest in
Australia.
The Group's strategy is designed to create value for its
shareholders, focused on consistently increasing earnings per share
via acquisitions and sustainable organic growth.
The Group's trading subsidiaries, as set out segmentally,
include:
UK & Europe: Abingdon Flooring Ltd, Alliance Distribution Ltd,
Avalon B.V, Distinctive Flooring Ltd, Ezi Floor
Ltd, Grass Inc. B.V, Interfloor Ltd, Victoria Belgium
N.V, Victoria Carpets Ltd, View Logistics Ltd, Westex
(Carpets) Ltd, Whitestone Weavers Ltd
Australia: Quest Flooring Pty Ltd, Primary Flooring Pty Ltd,
The Victoria Carpet Co. Pty Ltd
The person responsible for arranging the release of this
announcement on behalf of Victoria is Michael Scott, Chief
Financial Officer.
Cantor Fitzgerald Europe which is regulated in the UK by the
Financial Conduct Authority, and Joh. Berenberg, Gossler & Co
KG which is authorised by the German Federal Financial Conduct
Authority (BaFin) and subject to limited regulation by the
Financial Conduct Authority, are is acting for the Company and no
one else in connection with the Placing, and will not be
responsible to any person other than the Company for providing the
regulatory and legal protections afforded to their respective
clients nor for providing advice in relation to the contents of
this announcement or any matter, transaction or arrangement
referred to in it.
This Announcement includes statements, estimates, opinions and
projections with respect to anticipated future performance of the
Company ("forward-looking statements") which reflect various
assumptions concerning anticipated results taken from the Company's
current business plan or from public sources which may or may not
prove to be correct. These forward looking statements can be
identified by the use of forward looking terminology, including the
terms "anticipates", "target", "believes", "estimates", "expects",
"intends", "may", "plans", "projects", "should" or "will", or, in
each case, their negative or other variations or comparable
terminology or by discussions of strategy, plans, objectives,
goals, future events or intentions. Such forward-looking statements
reflect current expectations based on the current business plan and
various other assumptions and involve significant risks and
uncertainties and should not be read as guarantees of future
performance or results and will not necessarily be accurate
indications of whether or not such results will be achieved. As a
result, prospective investors should not rely on such
forward-looking statements due to the inherent uncertainty therein.
No representation or warranty is given as to the completeness or
accuracy of the forward-looking statements contained in this
announcement. Forward-looking statements speak only as of the date
of such statements and, except as required by the FCA, the London
Stock Exchange or applicable law, the Company undertakes no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise. 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 financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
Further details on the Acquisition and Placing
Information on Keraben
Keraben, operating from sites in Castellon, (near Valencia), the
heart of the Spanish ceramics industry, manufactures mid to
high-end ceramic flooring and wall tiles, which are sold
domestically and exported internationally. It sells to a
combination of wholesalers, retail groups, independent speciality
stores, and DIY chains throughout Continental Europe, North
America, and the Far East.
Keraben enjoys long-term customer relationships, many in excess
of 15 years, but without customer concentration (top ten customers
account for approximately 16 per cent. of sales for the financial
year ended 31 December 2016).
Keraben is a well-invested business, managed by a proven and
established management team who have identified and are executing a
clear strategy to drive profitable growth and gains of market
share.
Summary financials
Summary adjusted financial results for Keraben for the year
ended 31 December 2016, together with comparative information for
the prior two years, are set out below:
Year to 31 December 2014 2015 2016
(EURm)
Revenue 97.3 107.5 118.3
Adjusted EBITDA 24.7 28.4 36.4
Adjusted EBIT 19.6 21.4 27.5
As at 31 December 2016, Keraben had total assets of EUR195.6
million (GBP175.9 million).
Current trading for Keraben
During the nine months to 30 September 2017, Keraben has
continued to trade strongly and delivered more than 10 per cent.
year-on-year growth in EBITDA on an unaudited basis.
Strategic Rationale for the Acquisition
The Acquisition furthers Victoria's stated strategy of growing
earnings via carefully scrutinised, high quality international
acquisitions and organically via a committed sales focus and
operational synergies, and the board expect the acquisition of
Keraben will be materially earnings accretive in the first year of
ownership.
The Acquisition is highly complementary to Victoria's existing
product offering. In addition, the Acquisition continues the drive
into the European hard flooring market, following the recently
announced proposed acquisition of ceramic flooring manufacturer
Ceramiche Serra S.p.A., further enhancing Victoria's international
exposure and diversifying earnings outside of the UK.
The Board has previously noted that ceramic flooring is the
world's largest flooring sector, representing over 60 per cent. of
the 12.5 billion sqm of flooring sold globally and 30 per cent. of
flooring sold in Europe. Acquiring these businesses has opened a
large new flooring 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.
The Board does not envisage significant integration costs
arising from the Acquisition and as with other of the Group's
businesses, Keraben will operate with a significant degree of
autonomy.
Details of the Acquisition
On 15 November 2017, the Company entered into an acquisition
agreement made between the Company and the Vendors pursuant to
which the Company, via a new wholly owned subsidiary Kinsan Trade
S.L., has agreed, conditional on Admission, to acquire all of the
issued share capital of Keraben (the "Acquisition Agreement") for a
total consideration of EUR274.1 million (GBP246.5 million).
The Consideration is to be satisfied in part from the proceeds
pursuant to the Vendor Placing, with the balance (plus associated
transaction costs, taxes, and other expenses) from new banking
facilities.
Completion of the Acquisition Agreement is expected to occur
later today.
Details of the new banking facilities
Banking facilities to support the Acquisition have been provided
by the Company's existing group of lenders (comprising Barclays,
HSBC, RBS and Allied Irish Bank), including a new term loan of
EUR178 million (GBP160 million) being underwritten by HSBC and
Barclays under a new facility agreement dated 15 November 2017. The
new term loan matures in line with the existing revolving credit
facilities in October 2020.
Details of the Placing
Cantor Fitzgerald Europe and Berenberg, as agents for the
Company, have agreed to place 20,271,140 Vendor Placing Shares and
2,717,366 Firm Placing Shares (together the "Placing Shares") at
the Placing Price with certain existing and new institutional
investors, raising gross proceeds of GBP158.7 million and GBP21.3
million respectively.
The Placing Shares will represent approximately 20.17 per cent.
of the enlarged share capital of the Company.
The Placing Price represents a discount of 0.57 per cent. to the
closing mid-market price of 787.5 pence per Ordinary Share on 15
November 2017 (being the last day prior to this announcement).
The allotment and issue of the Placing Shares will not exceed
the Company's existing authorities. No shareholder approval is
therefore required.
In connection with the Placing, the Company has entered into a
placing agreement pursuant to which Cantor Fitzgerald Europe and
Berenberg, as agents for the Company, have agreed to use their
reasonable endeavours to procure subscribers for the Placing Shares
at the Placing Price (the "Placing Agreement"). The Placing is not
being underwritten.
The placing agreement contains customary warranties given by the
Company to Cantor Fitzgerald Europe and Berenberg with respect to
the Company's business and customary indemnities given by the
Company to Cantor Fitzgerald Europe and Berenberg in respect of
liabilities arising out of or in connection with the Placing.
The Placing is conditional upon Admission of the Placing Shares
becoming effective by no later than 8.00 a.m. on 16 November 2017
(or such later time and/or date as the Company and Cantor
Fitzgerald Europe may agree, but in any event not later than 8.00
a.m. on 24 November 2017).
Current Trading and Prospects for the Group
The Board confirms that it is confident that the Group's
performance will be in line with current market expectations for
the year to 31 March 2018.
We look to forward to the completion of the recently announced
proposed acquisition of Ceramiche Serra in December.
Notwithstanding the implementation of the manufacturing
reorganisation announced on 26 June 2017, which is now
substantially completed, the Group has continued to deliver organic
growth in addition to incremental contribution from acquisitions
made within the last twelve months.
The Company will be announcing its full interim results for the
six months to 30 September 2017 on 28 November 2017.
Note: All figures based on GBP1/EUR1.112
This information is provided by RNS
The company news service from the London Stock Exchange
END
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