Manufacturer sells divisions to global plastics group
Manufacturer Coral Products has sold its plastic mouldings and food packaging divisions to One Plastics Group for £7.9m.
The AIM-listed company’s share price rose more than 40% when the markets opened this morning, which was expected given last night’s closing share price of 6.1p valued the group at less than £5m.
The deal will see Coral Products’ chief executive Michael Wood move across, and he will leave the board on completion of the sale, which is expected in February.
Rotherham-headquartered One Plastics is the UK division of IPL Plastics Group, a global plastics business with annual revenues of more than £500m.
It has bought two businesses, Coral Products (Mouldings) and Interpack, that have a combined turnover of around £18m.
The Mouldings business is based at a 100,000 sq ft factory in Haydock, Merseyside, and Interpack – which became part of the grop in 2012 – is also now based there after relocating from Luton.
Coral Products will continue to hold the freehold for the Haydock site and the deal would see a 10-year lease agreement put in place, worth £300,000 a year.
In a statement, Coral Products said: “The board believes that the disposal provides the company with the opportunity to crystallise an attractive return on invested capital with respect to the sale companies, reduce net debt and also to provide additional financial flexibility to further develop and support the recent progress of the continuing group.”
Coral Products will consist of plastic extrusions manufacturer Tatra Rotalac and Manchester-based pump and spray manufacturer Global One Pak.
It will now conduct a review to “determine the most advantageous route to deliver shareholder value” from the sale proceeds.