Johnson’s £69m linens swoop
JOHNSON Service Group is making a major move in the table linens sector with a near £70m deal for a business supplying the likes of Jamie Oliver, The Wolseley and Brasserie Blanc.
The Cheshire company is buying the London Linen Supply, a specialist supplier of table linen and chefs’ wear to the restaurant, catering and hospitality market, based in London. The deal will make it the UK’s number one provider of linens to the restaurant/catering sector.
The Preston Brook-based firm said it would be part-funding the deal with a placing of 30 million new shares at 10p each through Investec to raise £21.1m. It hasd also agreed a £120m financing package with its banks.
The consideration is £65.4m payable in cash plus it is also acquiring £4m in cash. JSG said the deal would be immediately earnings enhancing and “significantly earnings enhancing” in 2016 and thereafter.
The company, which has been focusing on the linens sector as it has trimmed its high street dry cleaning chain, said the deal was in line with its strategy of “seeking out value accretive acquisitions” and follows it successful acquisition of Bourne in 2014 which is continuing to perform ahead of original expectations
JSG chairman Paul Moody said: “We are delighted to have completed this acquisition which represents a further significant step in our plan to expand the range and scale of services offered by our Textile Rental business.
“The new equity maintains the strength and flexibility in our balance sheet which is important as we continue to look for further value enhancing acquisitions.”
Chief executive Chris Sander added: “I have known London Linen for many years and have been very impressed with the quality of their business and the growth achieved in recent years. Its operations will complement our existing Stalbridge business and will give us significant production facilities near to the vibrant London restaurant market.”
London Linen’s operations are focused on the restaurant and catering linen rental market and it currently supplies some 900 customers at over 3,400 locations.
It perates from a 76,000 sq ft leased premise located in Southall, which processes, on average, 1.6 million pieces of linen per week, with a peak of some 2.0 million.
The directors believe that there is 20% additional processing capacity available before any further investment. More than £5m has been invested in the business over the last 30 months in order to increase both capacity and production efficiency.
Sue Russell and team at law firm Hill Dickinson advised Johnson Services Group on the acquisition, refinancing and placing of new shares.
