Michelmersh Brick - Acquisition of Fabspeed Holdings Ltd
24/11/2022 07:00
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RNS Number : 4220H Michelmersh Brick Holdings PLC 24 November 2022
24 November 2022
Michelmersh Brick Holdings Plc
("MBH", the "Company", or the "Group")
Acquisition of Fabspeed Holdings Ltd
Michelmersh Brick Holdings Plc (AIM: MBH), the specialist brick manufacturer,
today announces that it has acquired Fabspeed Holdings Ltd ("Fabspeed" or the
"Business"), a leading brick fabricator and manufacturer of off-site pre-built
brick products, for initial consideration of £6.25 million (the
"Acquisition").
Highlights
§ Leading brick fabricator and manufacturer of off-site pre-built brick
products, led by a highly experienced management team who are remaining with
the business
§ Earnings accretive transaction in first full financial year following
completion before synergies
§ Enhances MBH's position as a leading provider in clay and associated
pre-fabricated products
§ Initial consideration of £6.25 million paid in cash on completion
representing 5.3x Fabspeed's historic EBITDA of £1.2 million on a cash free,
debt free basis
§ Earn out consideration of up to £2 million payable in cash subject to
Business performance thresholds over a 24-month period
Frank Hanna, Joint Chief Executive Officer, said:
"We are delighted to announce the acquisition of Fabspeed and welcome the team
to the Group. Fabspeed is a great addition to our business, enabling us to
create a leading business in both clay and pre-fabricated products.
"With cross selling and distribution synergies to unlock over the coming
periods, we expect to enhance what is already an earnings accretive deal to
deliver further value for our shareholders as we integrate both businesses."
Background on Fabspeed
Fabspeed is a manufacturer of pre-fabricated building products with a
significant focus on bespoke, complex and specialist products, including
chimneys, arches, canopies and dormers. Fabspeed has a strong and
longstanding management team who will transfer with the business following
completion. The Business currently operates from three facilities, two in West
Yorkshire and one in Oxfordshire, employing approximately 89 people and
Fabspeed will immediately benefit from Michelmersh's broader infrastructure
and management support.
Strategic Rationale
The Board believes that the Acquisition is another important step in the
strategy for Michelmersh to remain Britain's leading specialist brick
manufacturer. Combining Fabspeed with Michelmersh's existing clay product
manufacturing business will create a leading combined group in clay and
associated pre-fabricated products, including brick cladding systems and brick
clad chimneys and arches. The enlarged Group will have a broader product
portfolio with enhanced routes to market, with Fabspeed's complementary
customer base and distribution channels.
The up-front acquisition price represents a multiple of 5.3x Fabspeed's 2021
EBITDA. The Board believes that the Acquisition is financially attractive and
is in line with Michelmersh's financial performance criteria for
value-enhancing acquisitions. The Acquisition will be earnings accretive in
the first full financial year after completion, being 31 December 2023, and
before the delivery of any revenue or cost synergies. Fabspeed has a history
of delivering organic revenue and profit growth with associated strong cash
conversion and delivered a profit before tax of £0.6 million for the 12
months ended 31 December 2021. At the same date, Fabspeed had gross assets of
£5.2 million.
Consideration Overview
The initial cash consideration of £6.25 million on a cash-free and debt-free
basis, which is subject to target working capital adjustments, has been paid
on completion this morning. The consideration has been satisfied through
existing cash resources. There is potential for an additional deferred
consideration of up to £2 million, payable in cash, based on achieving future
adjusted EBITDA growth targets over the two financial years following
completion.
Michelmersh Brick Holdings Plc Tel: +44 (0)1825 430 412
Frank Hanna, Joint Chief Executive Officer
Ryan Mahoney, Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Joint Broker) Tel: +44 (0)20 7523 8000
Max Hartley
Bobbie Hilliam
Harry Pardoe
Berenberg (Joint Broker) Tel: +44 (0) 203 207 7800
Richard Bootle
Detlir Elizi
Tom Graham
Yellow Jersey PR
Charles Goodwin Tel: +44 (0)7747 788 221
Annabelle Wills Tel: +44 (0)7775 194 357
The information contained within this announcement is deemed to constitute
inside information as stipulated under the UK Market Abuse Regulations. Upon
the publication of this announcement, this inside information is now
considered to be in the public domain.
About Michelmersh Brick Holdings PLC:
Michelmersh Brick Holdings PLC is a business with seven market leading brands:
Blockleys, Carlton, Charnwood, Freshfield Lane, Michelmersh, Floren and
Hathern Terra Cotta. These divisions operate within a fully integrated
business combining the manufacture of clay bricks and pavers. The Group also
includes a landfill operator, New Acres Limited, and seeks to develop future
landfill and development opportunities on ancillary land assets.
Established in 1997, the Company has grown through acquisition and organic
growth into a profitable and asset rich business, producing over 120 million
clay bricks and pavers per annum. Michelmersh currently owns most of the UK's
premium manufacturing brick brands and is a leading specification brick and
clay paving manufacturer.
Michelmersh strives to be a well invested, long term, sustainable,
environmentally responsible business. Opportunity, training and security for
all employees, whilst meeting the needs of stakeholders are at the forefront
of everything we do. We aim to lead the way in producing some of Britain's
premium clay products and enhancing our environment by adding value to the
architectural landscape for generations to come.
We are Michelmersh Brick Holdings PLC: we are "Britain's Brick Specialist".
Please visit the Group's websites at: www.mbhplc.co.uk
(http://www.mbhplc.co.uk/) and www.bimbricks.com
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