Johnson Service bolts on £26.5m hotel linens provider
DRYCLEANING and linen hire provider Johnson Service Group is paying £26.5m to buy a hotel linens specialist, Bourne Services Group.
The Cheshire company said would raise £12.8m through a placing of 26,23 million shares at 51p to fund some of the acquisition.
Based in Lincolnshire Bourne currently supplies around 350 hotels servicing approximately 28,000 bedrooms. It operates from purpose built freehold premises which cover four acres and has a total of 90,000 sq ft of production capacity and is located in Bourne, Lincs. The company services hotel customers in the Midlands, South Yorkshire, East Anglia, North London and the Home Counties.
The business is complementary to JSG’s current textile rental services offered by Johnsons Apparelmaster (workwear rental) and Stalbridge (premium hotel, catering and corporate hospitality linen rental) and is in line with the Group’s strategy to broaden the range of services available.
Johnson said hotel linen provision is a growing sector in the textile services market. Bourne has a history of annual revenue growth and a reputation for operational excellence in the industry, it added.
Most of Bourne’s management – with the exception of one of the vendors who has retired – will remain with the business.
The total consideration payable for Bourne was £26.5m in cash, including the acquisition of the freehold premises and an estimated net cash position of £4.5m. The deal was initially funded from the group’s new £70m debt facility which was secured with an existing syndicate of Lloyds, RBS and Santander last month.
Bourne’s revenue, adjusted EBITDA and profit before tax for the year ended February 2013 were £15.4m (2012: £14.1 million), £3.5m (2012: £3.3m) and £2.4m (2012: £2.2m) respectively.
Commenting on the acquisition and the placing, John Talbot, executive chairman of Preston Brook based Johnson said:”We are delighted to have completed this acquisition which represents a significant step in our plan to expand the range of service offered by our Textile Rental business.
“The new equity which part funds the acquisition 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 Bourne for many years and have been very impressed with the quality of their business. It is a great addition to the services we currently provide.”
North West law firm Hill Dickinson, led by corporate partner Sue Russell, provided legal advice to Johnson Services Group in relation to the acquisition and placing.
Separately Johnson Service Group also announced its full year results for 2013, which showed a strong performance by its linen hire division and a big improvement in its slimmed-down dry cleaning arm.
Revenue on a continuing basis was £193.6m compared with £198.7m in 2012, while adjusted profits were up from £10.7m to £13.4m.
Mr Talbot added: “The board is extremely pleased with the results for 2013 and we are confident that the group will continue to deliver on its strategy for 2014. The current year has started very positively and I am delighted with the acquisition of the Bourne linen business.”
The AIM company lifted its full-year dividend 10% to 1.21p per share.
Hill Dickinson, led by corporate partner Sue Russell, provided legal advice to Johnson Services Group in relation to the acquisition and placing.
