Mpac pays £15m for Lambert Automation as it continues to trade well

(Sharecast News) - Packaging company Mpac Group has acquired the entire issued share capital of Lambert Automation for an initial consideration of £15m cash, it announced on Wednesday, with further deferred and earn-out consideration possible in the future.The AIM-traded firm said Lambert was founded in 1973, and was currently trading as a provider of automation solutions to the medical and consumer healthcare markets.It is based in Tadcaster, and employs around 160 staff.The audited financial statements of Lambert for the year ended 31 December showed revenue of £17.9m and profit before tax of £1.3m, including depreciation and amortisation of £0.8m and an interest credit of £1.1m, including waived preference share interest.Audited net assets on the same date totalled £7.1m, including net cash of £2.3m and goodwill of £4.9m.Lambert recorded order intake of £24.5m in 2018, entering 2019 with a "significantly higher" order book than the previous year, which Mpac said gave it confidence in its expected out-turn for the current financial year.The board of Mpac said te acquisition represented a "compelling fit" with the company's strategic intent of being a market leader in the provision of full-line packaging solutions for the pharmaceutical, healthcare and food and beverage sectors.It explained that Lambert typically worked upstream in its customers' product and production lifecycle, which would enable Mpac to offer a more comprehensive and broader range of automation and packaging solutions to its customers.Mpac would enter the medical and healthcare product assembly and packaging market, fulfilling the expected increase in demand for wellness products.It would support Lambert's current strategic plan, exploring the growth opportunities opened by the access to its customer base and global business network, the directors said.Mpac confirmed it had acquired the entire issued share capital of Lambert for an initial consideration of £15m, on a cash-free, debt-free basis, to be paid in cash, and subject to customary adjustments for working capital.In addition, earn-out consideration would be paid on the basis of a multiple of five times the extent to which the average annual EBITDA of Lambert for the three years ending 31 December 2021 exceeded £2.5m.The earn-out consideration would be capped at a maximum of £2.5m, and would be paid in cash.Mpac said it expected that the acquisition would be immediately and materially earnings enhancing.It added that it intended for three of the existing shareholders, including managing director Warren Limbert, to remain with Lambert for at least the next three years.The acquisition of Lambert was expected to deliver sales synergies through cross-selling with the existing Mpac business and access to its global sales and service infrastructure.In addition, cost synergies were expected, including through access to Lambert's well-developed supply chain capabilities."Lambert is a high-quality business with proven performance and long-standing embedded relationships with global blue-chip customers," said Mpac chief executive officer Tony Steels."Clear synergies exist in the market, technologies and supply chain which will provide our customers and potential new customers even greater confidence in the delivery of complete turnkey packaging solutions."Lambert entered 2019 with a significantly higher order book than the previous year and I am excited about the potential of the combined business and the momentum it brings to the fulfilment of our strategic plans."In addition to the acquisition announcement, Mpac also updated the market on its current trading ahead of its annual general meeting, reporting that trading performance of its existing business in the current financial year was in line with the board's and the market's expectations.Order and quote activity remained "strong", and the current order book was said to be "significantly" above the previous year.Additionally, Mpac said further progress had been made in 2019 to secure the benefits from the delivery of its 'One Mpac' business model, as well as its long-term strategic priorities of 'Going for Growth', 'Making Service a Business' and delivering improved 'Operational Efficiencies'."I am pleased to report good progress in the trading performance for 2019, of the existing business, supported by growth in order intake and sales over the prior year in both equipment and services backed by a strong order book, good levels of quote activity and prospects," Tony Steels explained."The group has continued the momentum from the second half of 2018 into the start of 2019 and I am confident that we will be able to deliver results for the full year in line with expectation."