Macfarlane wraps up £7.5m acquisition of Wolverhampton packaging company

A WOLVERHAMPTON packaging company has been acquired by a national rival in a deal worth a potential £7.5m.

Network Packaging supplies packaging services to a range of customers in sectors including pharmaceuticals, third-party logistics companies, mobile phone providers and fashion retailers.

It has been acquired by Scottish group Macfarlane, a market leading packaging company focussed on the distribution of a wide range of packaging consumables, the design and manufacture of bespoke transit packaging and the design and manufacture of self-adhesive and resealable labels.

The acquisition strengthens the Glasgow-based group’s presence in the West Midlands, where its only other operation is a distribution hub at Siskin Parkway, East Middlemarch Business Park in Coventry.

The deal is for an initial consideration of £4.9m, £4.3m of which will be paid in cash and £0.6m will be settled by the issue of 1,592,360 ordinary shares, which will rank pari passu with the existing ordinary shares of the company.  

The deferment of up to £2.6m is subject to turnover and operating profits increasing by over 40% by the end of the acquisition period. The money will be payable in two instalments in the final quarters of 2015 and 2016 respectively.

The directors of Network Packaging who form its management team will remain with the business post-completion and have agreed service contracts covering the acquisition period.  

Network Packaging, founded in 1997, made an operating profit of £0.8m on turnover of £7.8m in the financial year to December 31, 2013 (audited).  Gross and net assets in the audited accounts at that date totalled £3.1m and £0.6m respectively.  

Macfarlane has carried out a £3m share placing and it said that subject to the completion of the placing, the acquisition would be funded partly from the proceeds of the placing and partly from existing resources. However, it stressed the acquisition was not conditional upon the completion of the placing.

Peter Atkinson, Macfarlane’s chief executive, said: “Network Packaging is a successful company and today’s acquisition demonstrates our continuing commitment to the strategy of developing our UK Packaging Distribution business.
 
“We are delighted that the Network Packaging management team will remain with the business.  They will add to our management capability and their experience in the third-party logistics sector and internet retail will complement the existing Macfarlane strengths in these market sectors.”

Law firm Browne Jacobson’s corporate finance team advised the seller. The team was was led by Birmingham-based Roger Birchall, assisted by Tina Robinson.

Birchall said: “This is a good deal for all parties. The acquisition is an important strategic step for Macfarlane Group as it seeks to strengthen its footprint in the Midlands. We are delighted to have assisted the shareholders of Network Packaging in realising 17 years’ hard work and dedication; in particular we are pleased that their invaluable management experience and expertise will continue to be utilised within the business post completion.”

BDO in Birmingham was the lead adviser to Network Packaging, its team being led by M&A Partner Roger Buckley.