IG Design announced the acquisition of Biscay Greetings Ltd Pty for AUD$9m or £5.5m.


from the Biscay website

"Biscay Greetings Pty Ltd commenced operations in 1971
We pride ourselves on being one of the leading card companies in Australia.
The vast majority of our products are manufactured locally.
Our customer service and commitment is of the highest quality.
Biscays comprehensive range of products are outstanding value, and best prices.
We have a trained sales team that offers friendly service and advice.
Our sales team and warehousing are located Australia wide."

so it looks like a good fit with IG Desgins own business which says on its website:

"We are Design Group – we design, manufacture, source and distribute a wide range of products for life’s important occasions, to transform special moments into memories.
We’re a diverse group of companies operating across multiple regions, categories, seasons and brands. We work with the best retailers in the world, offering a full end-to-end service from design through to distribution. Our products are found within three core categories: Celebrations, Stationery and Creative Play, and Gifting."

The Financials
IG Design is paying $9m or £5.5m of which £3m is stock and fixed assets. Operating profits before tax were AUD $2.9m (£1.7m). So this looks to me like a v good deal at 3.2x EBT. In fact is it too good to be true? I wonder if a layer of cost is being left out as the IG Design uses the less often used "operating profit before tax". IGD does point out it will have to provide £1.8m of working capital. Maybe thats the reason why it has bought Biscay at such a low multiple? I will do some digging on this. 

If i can get comfort on the financials then I think this is a great deal. It neatly fits into IGDs product set. IGD already has operations in Australia which means they can integrate it quickly. Also its about 8% earnings accretive on my back of the fag packet maths. So the ple multiple to Mar 19 falls from c16x to c 14x . Combine that with a record order book and I can see the shares reasserting their previous highs.

If anyone knows anything else re the Biscay financials, then I would be interested to hear. 


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