Textile business swoops on hotel linen firm in £12.5m deal
Uniform and textile services specialist Johnson Services Group has confirmed the £12.5m acquisition of a linen business.
The news was confirmed in a trading update issued by the Cheshire based business this morning.
JSG completed the acquisition of the entire issued share capital of Fresh Linen Holdings, together with its trading subsidiary Fresh Linen Limited, for a cash consideration of £12.5m on a debt free, cash free basis and subject to an adjustment for normalised working capital.
The consideration includes the freehold site.
Fresh generated revenue of £16.7 million and profit before taxation of £1.1m.
Reported net assets at 30 June 2019 were £4.3m, including a freehold site with a net book value of £1.7m.
The business, which has some 340 employees and operates from its freehold main site in Clacton-on-Sea and through a transport distribution hub in Rainham, London, regularly supplies over 900,000 items of linen a week, predominantly to hotels and gym clubs in the hospitality market in the South East.
The acquisition meets with JSG’s continuing growth strategy to increase the size and scale of its hospitality services in the UK and extend geographical reach as well as further diversifying the customer profile base within the Johnsons Hotel Linen portfolio.
The firm said a £10m investment plan in a new high volume linen plant in Leeds remains on target for opening in the Spring of this year.
This will provide extra processing capacity ahead of the busy summer months.
The company remains positive about the future prospects for the business and expects to announce full year results slightly ahead of market expectations.
Peter Egan, chief executive said: “This has been a strong trading period despite the general uncertainty in the UK economy.
“We have achieved consistent organic growth and, with this latest acquisition in the South East, are expanding into a new geographical area where we are currently under represented for servicing our high volume linen customers.
“We are delighted that 2020 will see the opening of the new plant in Leeds providing further capacity and are confident that with these new geographies, our established client base and operational expertise, we will continue to deliver future organic growth.”
The company expects to announce full year results on Monday, March 2nd.
