REG - Coats Group PLC - Acquisition of Texon

CoatsAnnouncement

06/07/2022 07:00

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RNS Number : 4342R  Coats Group PLC  06 July 2022

6 July 2022

Coats Group plc

Acquisition of Texon - a leading footwear solutions provider

Transaction building on Coats' existing presence in the highly attractive
Athleisure Footwear market

 

Coats Group plc ('Coats' or the 'Group'), the world's leading industrial
thread manufacturer, is pleased to announce it has signed a definitive
agreement to acquire 100% of Texon International Group Limited  ('Texon'), a
leading footwear solutions provider, for an enterprise value of $237 million.

Texon, a company with operations in Asia and Europe, supplies high quality
structural components to the global footwear market. The business is one of
the market leaders in innovation and supplies high-performance sustainable
materials, including heel counters, toe puffs and insoles to the highly
attractive premium athleisure footwear market. Texon is a complementary
addition to Coats' existing footwear business with attractive commercial
opportunities by leveraging Coats' existing footprint. Texon has a long
heritage as a leading supplier to the world's leading brands and is
anticipated to deliver attractive high single digit growth in a fragmented
market.

Texon is focused on sustainability, targeting zero-waste by 2025 with its
broad suite of sustainable product offerings supporting customers to fulfil
their own ambitions in sustainability, which will enable Texon to further
strengthen its existing presence amongst leading global footwear brands.

Under the terms of the transaction, Coats has agreed to pay an Enterprise
Value of $237 million, and a total net cash consideration of $211 million
after deducting assumed retirement liabilities and other customary
adjustments. The acquisition is expected to be earnings accretive in year 1
and will be funded initially through a bridge financing facility with net
leverage to remain within the Group's stated target of 1.0x to 2.0x. The
acquisition is expected to generate annual synergies of approximately $5
million by the end of the second full year of ownership through efficiencies
in commercial, procurement, marketing, distribution and production.

Rajiv Sharma, Coats Group Chief Executive, said:

"The acquisition of Texon will strengthen our existing presence in the highly
attractive athleisure footwear market. The business is complementary to Coats
and provides attractive future commercial opportunities as we work together
leveraging our combined expertise and knowledge to succeed with our customers.
We recognise and share Texon's focus on sustainability and innovation and
believe that this acquisition strengthens our ability to fulfil these shared
ambitions."

The acquisition is expected to complete in July.

For the year ended 31 December 2021, Texon generated revenue of $132 million,
EBITDA of $21 million(1) and adjusted operating profit of $17 million. Gross
assets subject to the transaction are $150 million. June LTM is on track to
deliver revenue of $145 million.

Lazard acted as financial adviser to Coats on the transaction.

A presentation for analysts and investors will be held at 8.30am GMT today,
available via:

https://www.investis-live.com/coats/62c2e14a478a650e00398e36/gwewa
(https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fcoats%2F62c2e14a478a650e00398e36%2Fgwewa&data=05%7C01%7C%7Cf6a44bc726c645a78b5308da5dc26534%7C048ff72770274cd0b672f075b0bdb973%7C0%7C0%7C637925386798670021%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=rc9OjHMG9S1Oi67N9f1GEfpSj8gMqQahfhFUvABVvKU%3D&reserved=0)

This announcement contains inside information for the purposes of the Market
Abuse Regulation.

(1) Including the impact of IFRS16

 

 Enquiry details

 Investors         Nick Kidd                       Coats Group plc  +44 (0)20 8210 5090
 Media             Richard Mountain / Nick Hasell  FTI Consulting   +44 (0)20 3727 1374

 

About Coats Group plc

Coats is the world's leading industrial thread company. At home in some 50
countries, Coats has a workforce of over 17,000 people across six continents.
Revenues in 2021 were US$1.5bn. Coats provides complementary and value-adding
products, services and software solutions to the apparel and footwear
industries. It also applies innovative techniques to develop high technology
performance materials threads, yarns, fabrics, and composites in areas like
personal protection, telecoms, energy, transportation, and household and
recreation. Headquartered in the UK, Coats is a constituent of the FTSE 250
and FTSE4Good Index Series. It is a participant in the UN Global Compact, a
member of the Ellen MacArthur Foundation, has approved short term Science
Based Targets to 2030 and is committed to developing a long-term target to
reach net-zero emissions by 2050, the highest level of ambition on climate
change under the Science Based Target initiative. The pioneering history and
innovative culture of Coats enable the delivery of its purpose to connect
talent, textiles, and technology to make a better and more sustainable world.

About Texon

Texon is a leading manufacturer of high performance, sustainable materials for
footwear, accessories, and functional apparel. With a proud heritage dating
back more than 75 years, Texon's broad product portfolio includes innovative
structural components, revolutionary woven materials, creative cellulose
solutions and high-performance fabrics. Trusted by the world's best-known
brands for its technical know-how and unwavering commitment to the
environment, Texon is a global business, with a local way of working and teams
in more than 90 countries. Always striving for better, Texon's ambition is
zero waste by 2025. This goal drives the business to make a sustainable
difference - creating high quality products that have a positive impact on the
planet, communities, and the future.

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