Dyro deal gives Straight growth injection
STRAIGHT, the Yorkshire environmental products group, has announced a deal to acquire Hull-based injection moulding specialist Dyro for £2.9m.
Leeds-based Straight believes the strategic deal will allow it to strengthen its position and also boost the group’s future development.
Dyro, which trades as Powell Plastics and is already Straight’s leading injection moulding partner for its products, operates more than 20 injection moulding machines.
In the year ended December 31, Dyro’s turnover was £10m and pre-tax profits were £1.12m.
Straight, which sells products including plastic wheelie bins and water butts, said in a statement this morning: “The board believes that the addition of Dyro’s manufacturing capability will allow the group to enhance overall profitability and fully exploit its market leading position.
“Dyro’s location in east Hull, with its good road links and easy access to UK ports, will also provide the group with a new UK distribution hub and an excellent base for its growing exports business.”
The £2.9m consideration consists of an initial cash payment of £970,000 with two further cash payments of £970,000 on each of the first and second anniversaries of completion.
The initial payment has been funded through a loan of £1.5m from the group’s lending bank, Lloyds TSB. The balance of the loan is being used to fund Dyro’s working capital requirements.
Prior to completion of the acquisition, Dyro entered into a sale and leaseback agreement with the vendors on Dyro’s property with an annual rent of £145,000.
During the last six months, trading between Straight and Dyro has increased following Straight’s acquisition of Helesi’s Bradford-based wheeled bin production equipment acquired in March 2010.
Dyro also has a proprietary injection moulding business which supplies shelving and storage products to the DIY sector.
Straight said these products were complementary to its garden and hardware business and cost saving and cross-selling synergies were expected.
Straight said it made “good progress” towards re-establishing the market share it enjoyed in wheeled bins prior to the closure of Helesi’s UK factory in September 2009.
Jonathan Straight, chief executive of Straight, said: “The evolution of Straight’s business model into direct production further strengthens its position in its core market place and will act as a springboard for further vertical integration as well as future acquisitions.
“Our team has considerable experience in running manufacturing businesses at both board and management levels and this will aid the speedy integration of Dyro into the group.
“The board has plans to further develop its new Hull site in line with the strategic goals of the group.”
A team from the corporate team at Leeds law firm Walker Morris, led by Debbie Jackson and Harry Singh, advised Straight on the deal.
