Last checked at 22 Jan 2019 07:00
22 January 2019
Coats Group plc
Sale of North America Crafts
Coats Group plc ('Coats,' the 'Company' or the 'Group'), the world's leading industrial thread manufacturer, announces the sale of its non-core North America Crafts business to Spinrite Acquisition Corp, a leading provider of craft products in North America.
Key points:
· Cash consideration payable at completion of $37m
· Sale proceeds will initially reduce Group net debt
· Further value accretive bolt-on acquisitions in the strategic focus areas of high growth and high-tech Performance Materials and Software Solutions businesses continue to be sought
· The sale of North America Crafts is subject to customary closing conditions and is expected to complete during the following weeks
Rajiv Sharma, Group Chief Executive, Coats, said: 'The sale of our standalone North America Crafts business allows us to focus completely on our high performing business-to-business global Apparel and Footwear, and Performance Materials businesses. It also gives North America Crafts more opportunities to grow by being part of a large crafting group.'
The disposal of North America Crafts constitutes a Class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules. Further details in respect of North America Crafts are set out at the end of this announcement.
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Enquiry details
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Investors | Rob Mann | Coats Group plc | +44 (0)20 8210 5175 |
Media | Richard Mountain / Nick Hasell | FTI Consulting | +44 (0)20 3727 1374 |
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This announcement contains inside information for the purposes of the Market Abuse Regulation.
About North America Crafts
Coats North America Crafts business manufactures and distributes foundation and fashion hand knitting yarns, threads, zips and a variety of needlecraft items. Key brands include Red Heart and Anchor.
In 2017 the North America Crafts business generated sales of $149 million and an operating profit of $12 million (pre an allocation of corporate costs). At 31 December 2017 the gross assets relating to this transaction were $66 million and net operating assets were $48 million (figures unaudited and based on management accounts). In H1 2018 the business generated sales of $62 million and an operating profit (pre an allocation of corporate costs) of $1 million.
North America Crafts results are anticipated to be reported as discontinued operations in the 2018 Coats Group financial results scheduled to be announced on 1 March 2019 (2017 results will be restated accordingly).
The headline acquisition proceeds of $37m, which is on a debt and cash free basis, will be subject to an adjustment for the level of net working capital as at the time of completion.
Pursuant to the Stock Purchase Agreement, Coats North America Consolidated Inc. (the seller) retains the control and responsibility for the eventual outcome of the ongoing Lower Passaic River environmental matters. There is no change in the Group's overall position in relation to this matter as a result of the sale of North America Crafts.
As previously announced, the smaller Latin America Crafts business is being integrated within the Industrial division. Once this integration is complete, the results of Latin America Crafts will be reported within the Industrial division.
About Spinrite Acquisition Corp
Spinrite is a leading craft company and provider of craft knitting yarns. Spinrite produces both branded and private label products and has a diversified presence across multiple channels with a focus on craft retailers. Spinrite was founded in 1952 and is headquartered in Listowel, Ontario. For more information, please visit www.yarnspirations.com.
About Coats Group plc
Coats is the world's leading industrial thread manufacturer. At home in some 50 countries, Coats employs 19,000 people across six continents. Revenues in 2017 were US$1.5bn. Coats' pioneering history and innovative culture ensure the company continues leading the way around the world, providing complementary and value added products and services to the apparel and footwear industries; and applying innovative techniques to develop high technology Performance Materials threads and yarns in areas such as automotive composites and fibre optics. Headquartered in the UK, Coats is a FTSE 250 listed company on the London Stock Exchange. To find out more about Coats visit www.coats.com.