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(Alliance News) - Midwich Group PLC on Friday said it intends to raise GBP39.7 million in equity via an accelerated bookbuild after it agreed to buy Starin Marketing Inc.
The AIM stock was trading 0.6% higher in London in morning trade at 537.20 pence a share, giving Diss, England-headquartered Midwich a market capitalisation of GBP425.0 million.
The audio visual equipment distributor said it will issue 7.9 million shares at a price of 500 pence each.
Investec Bank PLC and Joh Berenberg Gossler & Co KG London Branch are acting as joint bookrunners in connection with the placing.
The net proceeds of the placing will be used to repay the debt facilities drawn down in relation to the acquisition and provide additional resources to fund further acquisitions, Midwich explained.
Turning to acquisition, the company said it provides a foundation for Midwich's plans for US expansion with the benefit of a well-established market position, an experienced management team, and a large customer base.
Starin is expected to be modestly earnings accretive in the current financial year, including the impact of the total proposed fundraise, with future acquisitions expected to add further accretion, Midwich said.
For 2019, Starin had revenue of USD222.7 million and earnings before interest, tax, depreciation and amortisation of USD6.1 million.
Midwich said it will buy Starin for up to USD46.1 million, about GBP35.7 million, consisting of a USD27.1 million cash consideration and an assumption of up to USD19.0 million in existing debt facilities.
"Starin's exposure to, and relationships in, the growing unified communications segment will be greatly beneficial to Midwich as it seeks to increase revenues in this fast growing audio visual sub sector across its global network," said Midwich Managing Director Stephen Fenby.
Outside of the acquisition, Midwich said 2019 was another year of "good" growth for the company, despite negative sentiment in the global economy, as it delivered a "robust" organic performance.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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