|Fiberweb buys geosynthetic nets producer Boddingtons|
|December 29, 2010 (UK)|
Fiberweb plc is pleased to announce the acquisition of Boddingtons International Limited, the parent company of the Boddingtons group of companies, a leading UK based specialist geosynthetic and accessory manufacturer.
Boddingtons is the only UK producer of geosynthetic nets as well as a wide range of accessories and laminates for use in civil engineering projects and for temporary ground protection. Its business is highly complementary to Fiberweb's Wales-based Terram business, the market leader for geotextiles in the UK. There is a long-standing and growing supply relationship between the two businesses, accounting for around 10% of Boddingtons sales. There are also links with Fiberweb's Old Hickory, Tennessee-based Typar construction fabrics business in the US. Boddingtons is based in Maldon, Essex, with small manufacturing operations in Loddon, Norfolk and Melbourne, Australia and has sales offices in the US and Germany, with a total of 92 employees.
Boddingtons is a private UK company, majority owned by Robin Boddington, its founder who is now retired, and John Warner, its current Chief Executive, as well as by other current and former employees.
Boddingtons had sales in the year to 30th June 2010 of £14 million, with profit before interest and tax ("PBIT") of £1 million. Since 2007, Boddingtons has grown steadily, with a compound annual growth rate between 2007 and 2010 for sales of 21% and for PBIT of 62%. Boddingtons' net assets as at 30th June 2010 were £2.4 million.
Boddingtons and Fiberweb's existing geotextile business will form a new business unit in the industrial division, Fiberweb Geosynthetics, to be led by John Warner. An important growth initiative for the new division will be investment in a specialist, needlepunch geotextile production line in the UK.
Some rationalisation of operations is expected over time and significant synergies are expected from cost reduction, sales growth and tax. Significant synergies will be realised during 2011 and an annualised run-rate of at least £1 million is expected during 2012. One-off integration and investment costs of around £5 million are expected to be incurred, including the new line mentioned above.
Fiberweb will pay £8.2 million for 100% of the share capital of Boddingtons and will assume net debt as at 31 December 2010 estimated to be £1.2 million. The consideration of £8.2 million will be satisfied by a payment of £4.5 million in cash and the issue to existing Boddingtons shareholders of 4.5 million new Fiberweb shares, representing approximately 3.5% of Fiberweb's enlarged issued share capital. The new shares will rank pari passu with existing Fiberweb shares. £100,000 of the cash portion of the consideration will be paid into escrow for a period of 2 years as security for any indemnity claims. John Warner, the Chief Executive of Boddingtons will enter into a new contract of employment at completion, which is expected on 6th January 2011.
Fiberweb expects the acquisition to be materially accretive to earnings per share for the 2011 financial year. This transaction is not expected to have any material impact on Fiberweb's gearing, but will enhance Fiberweb's cash generation once integration has been completed by the end of 2011.
Daniel Dayan, Chief Executive of Fiberweb, commented:"Boddingtons is in a specialist construction area, which we have highlighted as an important part of our growth strategy. Boddingtons takes us beyond nonwovens in this market, adding successful product ranges and deepening our relationship with and understanding of key distribution and end-use customers. This is an important step in developing a broader, customer-focused growth strategy under experienced and successful management."