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LONDON (Alliance News) - Victoria PLC said Tuesday that it has acquired Abingdon Flooring Limited, a UK carpet manufacturer, and its wholly-owned subsidiaries for an initial cash consideration of GBP7.7 million.
Victoria, a manufacturer, supplier and distributor of design-led carpets and floorcoverings, said an additional GBP4.5 million will be payable to the vendors of Abingdon if annual performance targets for increased earnings before interest and taxation are achieved over a three year period.
Victoria will acquire Abingdon's subsidiaries, Alliance Distribution Limited and Distinctive Flooring Limited, under the deal. Following completion Victoria will retain Abingdon's existing bank facilities with RBS, it said.
Abingdon manufactures and distributes mid-range carpets, carpet tiles and hard flooring across the UK, producing in excess of nine million square metres of carpet each year. The company operates from facilities in South Wales, Kidderminster, and Yorkshire. All key senior management will be remaining with the business and it will continue to operate independently, said Victoria, "whilst benefiting from the synergies of an enlarged Group, in its ongoing drive for growth."
For the financial year to March 31, 2014 Abingdon generated turnover of GBP75.1 million, earnings before interest and taxation of GBP2.5 million and pretax profit of GBP2.2 million with net assets of GBP8.2 million. For the previous year, turnover came in at GBP70.3 million, earnings before interest and taxation of GBP1.64 million, pretax profit of GBP1.35 million, and net assets of GBP6.75 million.
"The Acquisition is in line with Victoria's strategy of growing its business with earnings enhancing acquisitions. The annual turnover of the enlarged Group will be more than £160m, operating from 6 manufacturing sites in the UK and 2 in Australia," said Victoria in a statement Tuesday.
The flooring manufacturer said the acquisition will be funded using facilities provided by the its long-standing bankers, Barclays Bank, and from its newly-signed fully-subordinated GBP10 million 2022 unsecured loan note facility provided by Business Growth Fund, a UK active growth capital investor in small mid-sized companies.
BGF is backed by five of the UK's main banking groups - Barclays, HSBC, Lloyds, RBS and Standard Chartered but is a fully independent organisation, said Victoria. This is BGF's first investment into a quoted public company.
The loan note carries a fixed coupon of 10%, but with no capital repayment for the first five years, with capital then being repaid over the following three years. BGF has also been granted an option over 746,000 new Victoria ordinary 25 pence shares, representing 5% of the company's deemed enlarged issued share capital. These options have an exercise price of GBP2.86; the latest closing mid-market price prior to completion.
"The acquisition of Abingdon Flooring represents the second significant step forward for Victoria, following the acquisition of Westex in December last year," said Victoria executive chairman, Geoff Wilding. "By integrating Abingdon into the Group, we anticipate accelerating Victoria's growth by enhancing its combined offering and reach across the UK."
"Overall, when added to our existing operations the two acquisitions have together substantially increased the scale, breadth and reach of Victoria's offering and are expected to be immediately earnings enhancing. Our focus is on integrating the business and delivering the synergies and growth we have identified," said Wilding.
Shares in Victoria were Tuesday afternoon trading 5.77% higher at 302.50 pence per share.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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