Carpet maker Victoria grows operation with £7.6m BGF-funded acquisition
WORCESTERSHIRE carpet manufacturer, Victoria, has strengthened its portfolio with the acquisition of a rival in a deal worth more than £7.6m.
In a first of its kind deal, the acquisition of Abingdon Flooring Ltd was financed by a loan from the Business Growth Fund.
Established in 2011, the Birmingham-based BGF was set up to help Britain’s growing businesses secure the funding they need for expansion.
BGF has supported Victoria by way of a £10m investment programme aimed at building a strong and sizeable flooring group.
The investment is BGF’s first in a publicly listed company and sees Gavin Petken, BGF’s Regional Director for The Midlands join the Victoria board.
The deal sees Victoria acquire not just the Abingdon operation but its wholly-owned subsidiaries, Alliance Distribution and Distinctive Flooring. The total value of the deal is £7.655m. Additional deferred cash payments of up to £4.5m will be payable to Abingdon if three year performance targets are met.
Victoria will retain Abingdon’s existing bank facilities with RBS.
Financial due diligence came from BDO’s Graham Elsworth and Vinny Patel, with legal advice supplied by Wragge Lawrence Graham’s Jeremy Millington. Legal advice for Victoria came from Brown Rudnick’s Lena Hodge.
Operating from facilities in South Wales, Kidderminster, and Yorkshire, and employing a workforce of more than 500 people, 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 per annum.
The company is one of the UK’s largest privately-owned manufacturers of quality carpets, producing a wide range of products under their market leading brands of Stainfree, Wilton Royal and Distinctive Flooring.
All key senior management will be remaining with the business and it will continue to operate independently.
For the financial year ended March 31, 2014 Abingdon generated turnover of £75.1m, EBIT of £2.5m and pre-tax profit of £2.2m.
Victoria said the acquisition was in line with its strategy of growing the business with earnings enhancing acquisitions. The annual turnover of the enlarged group will be more than £160m, operating from six manufacturing sites in the UK and two in Australia.
The Abingdon acquisition will be funded using facilities provided by the company’s long-standing bankers, Barclays, and from its newly-signed fully-subordinated £10m 2022 unsecured loan note from BGF.
Geoff Wilding, Executive Chairman of Victoria, said: “We are delighted that the company has acquired Abingdon with the support of BGF. The acquisition of Abingdon Flooring represents the second significant step forward for Victoria, following the acquisition of Westex in December last year. 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.”
Petken added: “Victoria has built a fantastic reputation in the UK and overseas for supplying a wide range of quality flooring materials. We saw this as an excellent opportunity to back a company with global ambitions and the potential to expand organically and through acquisitions such as Abingdon.”
Victoria has backed the deal with the issue of 100,000 new ordinary shares at 25p each to various vendors of Abingdon Flooring. The price is based on the closing market price of September 30 of 323.5p each.
The new shares are not part of the consideration for the purchase of Abingdon and are being subscribed for by the various vendors (who remain managers) as an investment – reflecting their confidence in the future of the company.
The shares are expected to be admitted to trading on AIM from Monday.
