£30m deal for water treatment and air hygiene business

Marlowe plc is making two acquisitions across its Governance Risk & Compliance (GRC) and Testing, Inspection & Certification (TIC) divisions for a combined consideration of up to £84m.

The business, which provides business-critical services and software that assure safety and regulatory compliance, is acquiring Sheffield-headquartered Hydro-X Group Ltd – a water treatment and air hygiene company – for £30m, along with Vinci Legal Ltd (VinciWorks), a regulatory compliance eLearning and software solution.

The deals broaden Marlowe’s end-to-end compliance software offering within GRC and deepen its presence within existing TIC markets.

London-headquartered Marlowe has now exchanged contracts to acquire Hydro-X. The acquisition is expected to complete by 21 October 2021.

Founded in 1984, Hydro-X employs about 180 staff and provides a range of technical compliance services focused on water & air compliance, water treatment, fire safety and health & safety.

The South Yorkshire-based business is complementary to, and provides a number of synergies with Marlowe’s TIC division.

In the year to 31 August 2021, Hydro-X generated revenue of £17.6m and an adjusted EBITDA of £3.5m, representing a 20% EBITDA margin. Its net assets as at 31 August 2021 were £5.3m.

Alex Dacre, chief executive of Marlowe plc, said: “Together, the acquisitions of VinciWorks and Hydro-X form a major step in delivering on the strategy announced at our Capital Markets Day, deepening our market share in attractive regulated TIC markets and significantly developing our digital proposition.

“VinciWorks advances our goal of becoming the market leader in governance, risk and compliance software and cements our position as the UK’s leading GRC compliance eLearning business, whilst Hydro-X majorly contributes to our safety and compliance services in our TIC division, offering significant synergies with WCS Group.

“Whether via software or services, Marlowe is committed to becoming the one-stop shop for customers’ safety and regulatory compliance needs.”

Following the completion of both acquisitions, Group run-rate revenues are expected to be approximately £325m and run-rate adjusted EBITDA is expected to be approximately £57m.

The consideration for both acquisitions is to be funded from cash and debt resources.