REG - Mpac Group PLC - Acquisition of CSi Palletising

MPACAnnouncement

01/10/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241001:nRSA4126Ga&default-theme=true

RNS Number : 4126G  Mpac Group PLC  01 October 2024

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ("THIS ANNOUNCEMENT")
IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR
IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH
JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS
ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES AND DOES NOT CONSTITUTE A
PROSPECTUS OR OFFERING MEMORANDUM OR AN OFFER IN RESPECT OF ANY SECURITIES AND
NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, FORMS OR IS
INTENDED TO FORM THE BASIS FOR ANY INVESTMENT DECISION IN RESPECT OF MPAC
GROUP PLC OR OTHER EVALUATION OF ANY SECURITIES OF MPAC GROUP PLC OR ANY OTHER
ENTITY AND SHOULD NOT BE CONSIDERED AS A RECOMMENDATION THAT ANY INVESTOR
SHOULD SUBSCRIBE FOR OR PURCHASE ANY SUCH SECURITIES.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE UK
VERSION OF THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS PART OF
UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE
TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT,
WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION,
AS PERMITTED BY UK MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH
PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

For immediate release

1 October 2024

Mpac Group plc

€56 million (c.£46.6 million) Acquisition of CSi Palletising

Mpac Group plc ("Mpac" or the "Company") (AIM: MPAC), the AIM quoted global
leader in high-speed packaging and automation solutions, is pleased to
announce that its indirectly wholly owned subsidiary Mpac Bidco B.V., has
entered into an Acquisition Agreement with the Sellers to conditionally
acquire the entire issued share capital of Elstar International B.V. a private
limited liability company incorporated under the laws of the Netherlands that
operates under the name CSi Palletising.

Acquisition Highlights

·     Acquisition of CSi Palletising, a leading provider of design,
manufacturing and installation services for end-of-line automation and
palletising solutions.

·    CSi Palletising has a trading history of 60 years and has a
high-quality established blue-chip customer base across the FMCG sector. It is
headquartered in the Netherlands and supported by well invested manufacturing
facilities in Romania.

·    The Board believes that the Acquisition is transformational and highly
complementary to the existing Mpac business. It also believes there is clear
strategic rationale for the Acquisition, extending Mpac's product line
offering and customer base and accelerates its previously stated strategic
intent to double revenue over the five-year period ending 31 December 2028.

·   CSi Palletising has an attractive historical growth profile and the
results for FY24 are expected to show continuing momentum in revenue and
profit growth.

·    For the year ended 31 December 2023, CSi Palletising's audited results
showed €71.5 million of revenue and €7.3 million of adjusted EBITDA and in
the six months to 30 June 2024, CSi Palletising generated unaudited revenue of
€44.4 million and €6.8 million of EBITDA. Audited gross assets as at 31
December 2023 were €44.3 million.

·    As at 30 June 2024, CSi Palletising had a project order book of
€64.3 million, underpinning management forecasts for the business for the
remainder of FY24 and into FY25.

·   The Acquisition presents numerous synergistic opportunities across both
costs and sales to both CSi Palletising and Mpac across all operating
functions. Strong EPS accretion is expected over a five-year strategic cycle.

·     The consideration payable to the Sellers for CSi Palletising is an
enterprise value of €56 million which is to be satisfied as follows:

o  Cash Consideration of €41.5 million on Completion;

o  €5 million through the issue of 1,039,500 Consideration Shares at the
Issue Price of 400 pence per share (subject to a two-year lock-up);

o  €6 million through the Vendor Loans; and

o  €3.5 million by two deferred consideration payments of €1.75 million
each which become payable on 1 January 2026 and 1 January 2027.

·     There will also be an additional cash payment at Completion for the
agreed cash, debt and working capital adjustments in connection with the
Acquisition which the Board expects to be covered by cash and any excess
working capital inherited at Completion by virtue of the Acquisition(1).

·    The Cash Consideration will be part funded by a Placing at the Issue
Price of 400 pence per Placing Share to raise gross proceeds for the Company
of approximately £29 million (before fees and expenses). The Placing is being
launched shortly after this Announcement by way of a separate announcement. In
addition, the Company will also separately announce a Retail Offer to raise
gross proceeds of up to £1 million for the Company (before fees and expenses)
to allow retail Shareholders an opportunity to participate in the Fundraising
at the same price as the Placing.

·   The balance of the Cash Consideration is being satisfied from the
Company's new Facilities with HSBC which have been entered into in connection
with the Acquisition. The new Facilities consist of a RCF of £35 million
(replacing the Group's existing £25 million RCF) and a new £12 million Term
Loan.

·     The Company will have significant undrawn borrowing facilities post
Completion of the Acquisition.

·   Net debt/EBITDA is expected to be less than 2.0x on Completion and the
Group is expecting rapid deleveraging to less than 1.0x by the end of FY25 due
to high levels of cash generation by the enlarged Group.

 1  Subject also to adjustments to add a daily cash ticker amount for the
period from (and including) 1 October 2024 up to (and including) the date of
Completion and to deduct any leakage during the period from (and including) 1
March 2024 up to the moment immediately preceding Completion.

Adam Holland, Chief Executive of Mpac, commented:

"I'm delighted to announce the transformational acquisition of CSi
Palletising, which along with our recent acquisitions of BCA and SIGA Vision,
will significantly transform our customer offering and core capabilities,
consistent with our stated strategic ambition. We have substantially expanded
the breadth of our technology and extended our customer reach globally. We are
excited about the numerous growth opportunities for the enlarged Group."

Jan de Bruijn, CEO of CSi Palletising, commented:

"CSi Palletising is very pleased with the combination of these two companies.
It represents a strong fit with the strategic plans that CSi Palletising has
made in the past for its Dutch, Romanian and Mexican subsidiaries. The
acquisition broadens CSi Palletising's offering to all customers. Moreover,
there is a good cultural fit and it increases the possibilities for CSi
Palletising colleagues to develop themselves further on an international
scale. This is the best possible next step for CSi Palletising."

Further information on the Acquisition, including the expected timetable of
principal events, is set out below. This Announcement should be read in its
entirety.

Unless the context otherwise provides, capitalised terms used in this
Announcement have the meanings ascribed to them in the section headed
"Definitions" at the end of this Announcement.

 

For further information please contact:

 Mpac Group plc                                                        Tel: +44 (0) 24 7642 1100

 Adam Holland, Chief Executive

 Will Wilkins, Group Finance Director
 Shore Capital (Nominated Adviser, Joint Broker and Joint Bookrunner)  Tel: +44 (0) 20 7408 4050

 Advisory

 Patrick Castle

 Sophie Collins

 Broking

 Henry Willcocks

 Panmure Liberum (Joint Broker and Joint Bookrunner)                   Tel: +44 (0) 20 3100 2000

 Edward Mansfield

 Will King

 Anake Singh

 Hudson Sandler                                                        Tel: +44 (0) 20 7796 4133

 Nick Lyon

 Nick Moore

 Francesca Rosser

 

 

Introduction

The Company is pleased to announce that its indirectly wholly owned subsidiary
Mpac Bidco, has entered into the Acquisition Agreement with the Sellers to
conditionally acquire the entire issued share capital of Elstar International
B.V. a private limited liability company incorporated under the laws of the
Netherlands that operates under the name CSi Palletising, a leading provider
of design, manufacturing and installation services for end-of-line automation
and palletising solutions.

The Board believes that CSi Palletising is highly complementary to the
existing Mpac business and is in accordance with its stated acquisition
strategy to develop its 'fuller' line offering.

The consideration payable to the Sellers for CSi Palletising is an enterprise
value of €56 million which is to be satisfied: (a) on Completion as to
€41.5 million in cash; as to €5 million through the issue of 1,039,500
Consideration Shares at the Issue Price; and as to €6 million through the
Vendor Loans; and (b) by two deferred consideration payments of €1.75
million each which become payable on 1 January 2026 and 1 January 2027. There
will also be an additional cash payment to the Sellers at Completion for the
agreed cash, debt and working capital adjustments in connection with the
Acquisition which the Board expects to be covered by cash and any excess
working capital inherited at Completion by virtue of the Acquisition(1).

The Cash Consideration will be part funded by a Placing at the Issue Price of
400 pence per share which is being announced later today and is expected to
raise approximately £29 million for the Company (before fees and expenses).
In addition, Mpac will also separately announce a Retail Offer to raise gross
proceeds of up to £1 million (before fees and expenses), to allow retail
Shareholders an opportunity to participate in the Fundraising at the same
price as the Placing. The balance of the Cash Consideration is being satisfied
from the Company's new Facilities with HSBC which have been entered into in
connection with the Acquisition. The Company will have significant undrawn
borrowing facilities within its RCF post Completion.

The Fundraising is conditional upon, amongst other things, the approval by the
Shareholders of the Resolutions to be proposed at the General Meeting. The
Fundraising will not be underwritten. The Resolutions must be passed by
Shareholders at the General Meeting in order for the Fundraising to proceed.
The Fundraising is not conditional on the completion of the Acquisition but
the Joint Brokers have a right to terminate the Placing Agreement if the
Acquisition Agreement terminates before Admission.

If the conditions relating to the issue of the Placing Shares are not
satisfied or the Placing Agreement is terminated in accordance with its terms,
the Placing Shares will not be issued and the Company will not receive the
associated placing monies. In this scenario, the Retail Offer will similarly
not proceed and the Acquisition will not complete.

 1  Subject also to adjustments to add a daily cash ticker amount for the
period from (and including) 1 October 2024 up to (and including) the date of
Completion and to deduct any leakage during the period from (and including) 1
March 2024 up to the moment immediately preceding Completion.

Background information on Mpac

Mpac is a specialist in machine building, i.e. robotics, for clients requiring
solutions for packaging machinery, cartoning and case handling, particularly
in the food and beverage and healthcare sectors, and now emerging in the field
of clean energy. Alongside original equipment manufacture, Mpac has a well
established service offering for its customers.

On 10 September 2024, the Company announced its H1 2024 results. In the H1
2024 results, the Company stated in relation to the half year period, that the
Company delivered 'a strong financial performance in line with the Board's
expectations, with significant revenue, margin and profit growth'. In the H1
2024 results, the Company also gave the following update in relation to the
Group's current trading and outlook:

•      Current trading is in line with the Board's expectations and the
Group has a diverse order book going into H2 2024, providing good revenue
coverage supported by a strong prospect pipeline;

•      Confident in relation to the full year end and, with continued
improvement in project margins, in delivering the H2 underlying profit
weighting which was announced earlier in the year; and

•    The Group's balance sheet remains strong and, as predicted, the
timing of orders led to an expansion of working capital in H1 which is
expected to unwind as the projects complete.

On 18 September 2024, the Company announced that it had acquired the entire
issued share capital of BCA for a total consideration of $17 million, before
customary adjustments in respect of cash and working capital, of which $6
million was satisfied through the issue of 1,059,349 new Ordinary Shares. BCA
operates upstream of Mpac and CSi Palletising, in the processing and handling
of products in the food, life sciences and other general industrial sectors.
The Board utilised the Company's existing shareholder authorities granted at
the 2024 AGM to allot the BCA Consideration Shares.

Information on CSi Palletising

Overview of CSi Palletising

CSi Palletising, headquartered in the Netherlands, is a global leader in
end-of-line packaging automation, with production facilities in Romania and
additional sales presence in the USA, Mexico, Germany, France, Spain and the
United Kingdom. It designs, manufactures and installs palletising, pallet
handling and case transport systems, including associated aftersales services.
As at 31 December 2023, CSi Palletising had, in aggregate, approximately 440
employees. CSi Palletising's sales have grown from €51.3 million in 2021 to
€71.5 million in 2023.

CSi Palletising offers customers comprehensive end-of-line solutions from case
transport and conveying, to integrated palletising and pallet handling
systems. CSi Palletising specialises in fixed-share products such as cases and
bags and its machines have a low to medium capacity range of up to a maximum
of 120 cases per minute. CSi Palletising has developed integration "know-how"
of both internally developed and third-party systems including autonomous
robotics technology and specialist in-house software.

CSi Palletising has a longstanding customer base with 100 per cent. customer
retention across major "blue chip" groups and its average length of customer
relationship is over 15 years, with the top six strategic accounts each having
a relationship of more than 30 years. The remaining customers in the top ten
strategic accounts of CSi Palletising have an average relationship of 21
years. Key customers include Lamb Weston, Mondelez International, Nestle,
PepsiCo and Unilever. CSi Palletising also has a growing global installed base
of over 2,500 lines with 80 to 90 solutions being delivered per year as key
elements in systems.

CSi Palletising financial summary

The Board believes that CSi Palletising has a strong historical financial
track record and is on track to achieve its management budget for 2024 with
the remainder of the year underpinned by a strong forward orderbook which
amounted to €64.3 million as at June 2024. The results for CSi Palletising
for the financial year ending 31 December 2024 are expected to show continuing
momentum in revenue and earnings growth compared to the financial year ended
31 December 2023.

Set out below is the unaudited financial summary for CSi Palletising for the
year to date to 30 June 2024 and audited financial information for the
financial years ended 31 December 2023, 2022 and 2021.

 

                                                    Financial year ended 31 December
                               YTD to 30 June 2024  2023         2022         2021

                               €m                   €m           €m           €m
 Revenue                       44.4                 71.5         63.1         51.3
 Revenue growth                -                    13.3%        19.5%        -
 Gross profit                  26.0                 38.9         33.3         30.4
 Operating expense             (19.2)               (31.6)       (28.2)       (26.8)
 EBITDA                        6.8                  7.3          5.1          3.6
 EBITDA margin %               15%                  10%          8%           7%
 Underlying profit before tax  6.3                  6.0          3.9          2.4
 Operating cash-flow           5.6                  16.5         7.5          (0.6)

Source: CSi Palletising

 

For the financial year ended 31 December 2023, CSi Palletising's top five
customers accounted for 80 per cent. of revenue generated, including one very
large blue-chip customer which accounted for slightly over 50 per cent. of
revenue. The revenue from this largest customer in the financial year ended 31
December 2023 was generated from 47 separate orders and change orders from
many different decision makers, across both Original Equipment and Service
ranging from €10,000 to €12.3 million in value. In 2023, CSi Palletising
won 156 orders across all customers.

Project order intake for the first eight months of 2024 (January to August
2024) has remained strong at €32.4 million, with a broader customer mix than
revenue for the financial year ended 31 December 2023, following CSi
Palletising management's strategy of diversifying order intake. As a result,
the largest customer from the financial year ended 31 December 2023 represents
28 per cent. of the order intake to August 2024 and is no longer the largest
contributor to order intake. In addition, this customer placed 38 separate
orders and change orders, ranging from €12,000 to €1.4 million, whilst its
second largest customer placed 25 separate orders and change orders ranging
from €5,000 to €6.9 million. CSi Palletising has won 104 orders in the
first eight months of 2024 for palletising alone.

Background to and reasons for the Acquisition

The Directors believe that the Acquisition is highly complementary to Mpac's
existing business, and significantly improves and increases its capability and
offering in end-of-line and palletising solutions. The Acquisition is in line
with the Company's stated ambition to double revenue in five years from 2023.
The Directors believe that the key attractions of CSi Palletising and the
Acquisition for the Company are as follows:

·      CSi Palletising is a high-quality provider of solutions for
palletising and material handling;

·    CSi Palletising offers an enhanced package of maintenance and
aftermarket services across a growing global installed base;

·   CSi Palletising has long-standing, "blue-chip" customer relationships
in attractive sectors and its top six customers all exceed 30-year tenures;

·      CSi Palletising has strong robotics and systems
integration/turnkey capabilities;

·      CSi Palletising has long-established, lower-cost manufacturing
and assembly facilities in Romania; and

·      CSi Palletising has an established and self-sufficient leadership
teams across all sites.

Key synergy opportunities from the Acquisition

Mpac has developed an integration plan for the Acquisition which it intends to
implement on Completion. The Directors believe that the Acquisition presents
numerous synergistic opportunities to both CSi Palletising and Mpac across all
operating functions, including the opportunity to:

·      increase CSi Palletising's product sales in North America by
utilising Mpac's existing presence and relationships in the United States and
Canada;

·    develop a stronger sales presence in Latin America, supported through
a Mexico location, and to drive Mpac sales in the region through CSi
Palletising's experience and relationships;

·   secure access to a lower cost manufacturing and assembly facility in
Romania and to drive cost-saving efficiencies within Mpac's existing
operations;

·      cross sell Mpac's equipment to CSi Palletising's strategic
accounts;

·      generate pull through sales of CSi Palletising's palletisers to
existing Mpac customers; and

·      utilise Mpac's experience in after sales service to drive
cost-saving synergies.

The Company has detailed knowledge of CSi Palletising's operating markets and
overlapping customer relationships. As a result, the Board believes execution
risk associated with the Acquisition is mitigated by its integration plan.

Financial effects of the Acquisition

The Acquisition will provide a step change in the Group's earnings and create
a significantly larger Group. The Directors expect that the Acquisition will
provide strong EPS accretion to the Group over a five year strategic cycle.
Following Completion, consolidated FY24 net debt/adjusted EBITDA is expected
to be approximately 1.8x. The Board expects the enlarged Group to be highly
cash generative which will drive a rapid deleveraging and is expecting
leverage to fall to below 1.0x by the end of FY25.

Principal terms of the Acquisition

On 30 September 2024, Mpac Bidco, an indirectly wholly owned subsidiary of
Mpac, incorporated in the Netherlands for the purposes of making the
Acquisition, entered into the Acquisition Agreement pursuant to which it
agreed conditionally to purchase the entire issued share capital of CSi
Palletising, from the Sellers. The Acquisition Agreement is governed by the
laws of the Netherlands.

There is €56 million of consideration payable to the Sellers pursuant to the
terms of the Acquisition Agreement consisting of:

·      €41.5 million in cash, payable at Completion;

·     the Vendor Loans which will be put in place at Completion and
comprise: (i) a €1.5 million loan from the Sellers to Mpac Bidco which is
repayable at any time up to the date falling 12 months following Completion;
and (ii) a €4.5 million loan from the Sellers to Mpac Bidco repayable at any
time up to the date falling 24 months following Completion, each of which
bears interest at 10 per cent. per annum, payable in cash quarterly;

·      the issue to the Sellers at Completion of Consideration Shares
with a value of €5 million at the Issue Price; and

·    two deferred consideration payments of €1.75 million each which
become payable on 1 January 2026 and 1 January 2027, respectively.

There is also an additional €21 million (approximately) for the agreed cash,
debt and working capital adjustments, payable in cash to the Sellers at
Completion which the Board expects to be covered by cash and any excess
working capital inherited at Completion by virtue of the Acquisition(1).

In relation to the Consideration Shares, the Sellers have undertaken that,
subject to certain limited exceptions, they will not dispose of any interest
they hold in the Consideration Shares during the period from the date of issue
of the Consideration Shares until and including the date 24 months after
Completion.

The Acquisition is conditional upon, amongst other things, the Placing
Agreement having become unconditional in all respects, the Acquisition having
been unconditionally authorised from a national security perspective by a
decision of the Romanian Competition Council on terms that are reasonably
satisfactory to Mpac Bidco, the Resolutions being duly passed and the
consultation procedures with the works council established at the level of CSi
Industries B.V. in accordance with article 25 of the Dutch Works Council Act
(Wet op de ondernemingsraden) having been complied with. The Company has
already submitted a notification to the Romanian Competition Council for its
authorisation of the Acquisition from a national security perspective and,
based on advice it has received, the Company expects a decision to be made
within two to three months.

The Acquisition Agreement contains certain customary warranties (including tax
warranties) given by the Sellers in favour of Mpac Bidco, subject to certain
customary limitations, as well as other customary undertakings and restrictive
covenants given by the Sellers.

Mpac Bidco has obtained a buy-side warranty and indemnity insurance policy
which, subject to certain exceptions, provides cover for claims against the
Sellers under the business and tax warranties and the tax indemnity in the
Acquisition Agreement of up to €16.8 million and under the fundamental
warranties in the Acquisition Agreement of up to €52.5 million, subject to
an aggregate cap for all claims under the insurance policy of €52.5 million.
The Sellers have agreed to bear the vast majority of the premium payable for
the insurance policy.

1 Subject also to adjustments to add a daily cash ticker amount for the period
from (and including) 1 October 2024 up to (and including) the date of
Completion and to deduct any leakage during the period from (and including) 1
March 2024 up to the moment immediately preceding Completion.

Principal terms of the Facilities

Facilities Agreement

On 30 September 2024, the Company (as borrower), Mpac Corporate Services
Limited, Mpac Overseas Holdings Limited and Mpac Lambert Limited (as
guarantors) (together the "Obligors") and HSBC (as lender) entered into the
Facilities Agreement, pursuant to which HSBC has agreed to provide the Company
with a term loan facility of £12 million (the "Term Loan") and a revolving
credit facility of £35 million (the "RCF"), replacing the Group's existing
bank facilities. Certain other subsidiaries of the Company incorporated in
Canada, the US and the Netherlands have acceded to the Facilities Agreement in
order to provide guarantees and indemnities immediately after the Company's
entry into the Facilities Agreement, and certain members of CSi Palletising's
group will also accede to the Facilities Agreement after Completion.

Amounts borrowed under the Term Loan are to be used for funding the
acquisition of CSi Palletising and amounts borrowed under the RCF are to be
used for funding the Acquisition and for general corporate and working capital
purposes, including for permitted acquisitions and refinancings.

The Term Loan is repayable quarterly in instalments of £1 million of
principal plus any related interest due on such repayment instalments. The
final repayment instalment (covering the balance of all amounts outstanding in
relation to the Term Loan) will be due on 30 September 2027.

Amounts borrowed under the RCF are repayable quarterly, unless rolled over
into the following quarter at the option of the Company, with the final
repayment due on 30 September 2027.

The Company has the option to extend the provision of the RCF until 30
September 2028 and again until 30 September 2029, with the consent of HSBC
(subject to an agreed extension fee at the relevant time). There are also
options for the Company to request increase or incremental facilities up to a
maximum of £12 million if the Term Loan is not drawn (subject to fees to be
agreed at the time).

The Facilities Agreement contains adjusted leverage and interest cover
financial covenants, each to be tested quarterly in respect of each period of
12 months ending on or about the last day of each financial quarter.

The Facilities Agreement also contains terms relating to default and mandatory
repayment, as well as covenants and undertakings that are customary for
agreements of this type.

The Facilities Agreement is governed by English law.

Security

 

On 30 September 2024, the Obligors also entered into a debenture and security
confirmation deed in favour of HSBC, both of which are governed by English
law.

Under the terms of the debenture, each Obligor has granted security over all
of its assets, including the shares of certain subsidiaries owned by the
Company. The security is granted to secure all present and future obligations
owing to HSBC by any of the Obligors.

Pursuant to the terms of the security confirmation deed, the Obligors confirm
that various guarantees and security provided to HSBC under previous
financings will remain in full force and effect and will secure the debt
outstanding under the Facilities Agreement.

Expected timetable of Events

 Announcement of the Acquisition                                                1 October 2024
 Announcement of the Placing                                                    1 October 2024
 Announcement of the Retail Offer                                               1 October 2024
 Announcement of the results of the Placing                                     1 October 2024
 Publication of the Circular                                                    2 October 2024
 Announcement of the results of the Retail Offer                                8 October 2024
 Latest time and date for receipt of completed proxy appointments and CREST     9.00 a.m. on 16 October 2024
 voting instructions
 General Meeting                                                                9.00 a.m. on 18 October 2024
 Announcement of results of General Meeting                                     18 October 2024
 First Admission and commencement of dealings in the Fundraising Shares on AIM  8.00 a.m. on 21 October 2024
 Where applicable, expected date for crediting of the Fundraising Shares in     As soon as possible following First Admission
 uncertificated form to CREST accounts
 Where applicable, expected date for despatch of share certificates in respect  Within 10 business days of
 of the Fundraising Shares
First Admission
 Expected timing for Completion                                                 Approximately December 2024

 

Notes:

1.       All references to times in this document are to London time.

2.      The dates and times set out in the above timetable and in the rest
of this document are indicative only and may be subject to change. If any such
dates and times should change, the revised times and/or dates will be notified
by the Company by announcement via RIS.

3.       All events in the above timetable scheduled to take place after
the General Meeting are conditional on the approval by the Shareholders of the
Resolutions.

 

Definitions

The following definitions apply throughout this Announcement (unless the
context otherwise requires):

"2024
AGM"
the annual general meeting of the Company held on 15 May 2024;

"Acquisition"
 
the proposed acquisition by the Company of the entire issued share capital of
CSi Palletising pursuant to the terms of the Acquisition Agreement;

"Acquisition Agreement"
the conditional acquisition agreement dated 30 September 2024 between Mpac
Bidco and the Sellers, further details of which are set out in this
Announcement;

"Act"
the Companies Act 2006 (as amended from time to time);

"Admission"
First Admission and Second Admission, as the context may require;

"AIM"
AIM, the market of that name operated by the London Stock Exchange;

"AIM
Rules"
the 'AIM Rules for Companies' published by the London Stock Exchange (as
amended from time to time);

"BCA"
Boston Conveyor & Automation, Inc., which was acquired by the Company on
18 September 2024;

"BCA Consideration Shares"                      the
1,059,349 new Ordinary Shares which were allotted in connection with the
acquisition of BCA;

"Bookbuild
Platform"                                 the
online capital markets platform developed by BB Technology Limited;

"Cash
Consideration"
€41.5 million (plus an additional sum for the agreed cash, debt and working
capital adjustments which the Board expects to be covered by cash and any
excess working capital inherited at Completion by virtue of the Acquisition)
payable in cash by Mpac Bidco to the Sellers in accordance with the
Acquisition Agreement;

"certificated form" or "in certificated form"  an Ordinary Share recorded on
a company's share register as being held in certificated form (namely, not in
CREST);

"Company" or
"Mpac"                               Mpac Group
plc, a company incorporated and registered in England and Wales with
registered number 00124855;

"Completion"
completion of the Acquisition in accordance with the terms of the Acquisition
Agreement;

"Consideration"
the consideration payable under the Acquisition Agreement, being the Cash
Consideration, the Consideration Shares and the Vendor Loans;

"Consideration Shares"
the 1,039,500 new Ordinary Shares to be issued by the Company to the Sellers
in connection with the Acquisition;

"CREST"
the relevant system (as defined in the CREST Regulations) in respect of which
Euroclear is the operator (as defined in those regulations) which facilitates
the transfer of title to shares in uncertificated form;

"CREST
Regulations"                                the
Uncertificated Securities Regulations 2001 (S.I. 2001 No. 3755) (as amended
from time to time);

"CSi Palletising"
 
Elstar International B.V., a private limited liability company incorporated
under the laws of the Netherlands, registered with the Dutch trade register
under number 17202065, and which operates under the name 'CSi Palletising';

"Directors" or
"Board"                               the
directors of the Company or any duly authorised committee thereof;

"EBITDA"
earnings before interest, tax, depreciation and amortisation;

"Enlarged Share Capital"
the issued share capital of the Company following First Admission (including
the Fundraising Shares, assuming full take-up under the Retail Offer);

"Euroclear"
Euroclear UK & International Limited, the operator of CREST;

"Existing Ordinary Shares"
21,533,773 ordinary shares of £0.25 (25 pence) each in the capital of the
Company in issue at the date of this Announcement, all of which are admitted
to trading on AIM;

"Facilities"
the facilities made available to the Group pursuant to the Facilities
Agreement;

"Facilities
Agreement"                               the
facilities agreement between, amongst others, the Company (as borrower) and
HSBC (as lender), further details of which are set out in this Announcement;

"FCA"
the UK Financial Conduct Authority;

"First
Admission"
admission of the Fundraising Shares to trading on AIM becoming effective in
accordance with Rule 6 of the AIM Rules;

"FSMA"
the Financial Services and Markets Act 2000 (as amended from time to time);

"Fundraising"
the Placing and the Retail Offer;

"Fundraising
Shares"                                the
Placing Shares and the Retail Offer Shares;

"FY24"
financial year ending 31 December 2024;

"FY25"
financial year ending 31 December 2025;

"General
Meeting"
the general meeting of the Company to be held at 2 Argosy Court, Coventry, CV3
4GA at 9.00 a.m. on Friday 18 October 2024 (or any adjournment thereof);

"Group"
the Company, its subsidiaries and its subsidiary undertakings (each as defined
in the Act) as at the date of this document;

"H1
2024"
the six month period ended 30 June 2024;

"H2
2024"
the six month period ended 31 December 2024;

"HSBC"
HSBC UK Bank plc, the lender under the Facilities;

"ISIN"
International Securities Identification Number;

"Issue
Price"
400 pence per New Ordinary Share;

"Joint
Brokers"
SCS and Panmure Liberum;

"London Stock Exchange"                         London
Stock Exchange plc;

"Mpac
Bidco"
Mpac Bidco B.V., a private limited liability company incorporated under the
laws of the Netherlands, registered with the Dutch trade register under number
94964823 and which was incorporated for the purposes of the Acquisition;

"New Ordinary
Shares"                              together,
the Placing Shares, the Consideration Shares and the Retail Offer Shares;

"Notice of General Meeting"                       the
notice convening the General Meeting which will be included in the Circular;

"Official
List"
the Official List of the FCA;

"Ordinary
Shares"
the ordinary shares of £0.25 (25 pence) each in the capital of the Company;

"Panmure
Liberum"
Panmure Liberum Limited, the Company's joint broker;

"Placing"
the conditional placing of the Placing Shares by the Joint Brokers, as agents
on behalf of the Company, pursuant to the Placing Agreement,;

"Placing
Agreement"                                 the
conditional agreement dated 1 October 2024 between: (i) SCC; (ii) SCS; (iii)
Panmure Liberum; and (iv) the Company relating to the Placing;

"Placing
Shares"
the new Ordinary Shares to be issued, conditional on First Admission, in
connection with the Placing;

"Prospectus Regulation Rules"                  the prospectus
regulation rules made by the FCA pursuant to section 73A of the FSMA;

"RCF"
the revolving credit facility of £35 million made available to the Company
pursuant to the Facilities Agreement;

"Registrar"
Link Group Limited, the Company's registrar;

"Resolutions"
the shareholder resolutions set out in the Notice of General Meeting to be
proposed at the General Meeting to grant the Directors the authority to allot
and issue the New Ordinary Shares on a non-pre-emptive basis;

"Retail Investors"
 
retail Shareholders, who are resident in the United Kingdom, and are a
customer of one of the intermediaries operating through the Bookbuild
Platform;

"Retail
Offer"
the separate offer by the Company of the Retail Offer Shares, through the
Bookbuild Platform, for Retail Investors, further details of which will be
announced later today;

"Retail Offer
Shares"                                  up
to 250,000 new Ordinary Shares to be issued, conditional on First Admission,
in connection with the Retail Offer;

"RIS"
a regulatory information service operated by the London Stock Exchange as
defined in the AIM Rules;

"SCC"
Shore Capital and Corporate Limited, the Company's nominated adviser for the
purposes of the AIM Rules;

"SCS"
Shore Capital Stockbrokers Limited, the Company's joint broker;

"Second
Admission"
admission of the Consideration Shares to trading on AIM becoming effective in
accordance with Rule 6 of the AIM Rules;

"Securities
Act"
the United States Securities Act of 1933, as amended;

"Sellers"
CSitsme B.V., Aaseck B.V. and Lust4Life Holding B.V.;

"Shareholders"
holders of the Ordinary Shares of the Company from time to time;

"Shore
Capital"
SCC and/or SCS as the case may be;

"Term Loan"
 
the term loan facility of £12 million provided by HSBC to the Company
pursuant to the Facilities Agreement;

"UK"
the United Kingdom of Great Britain and Northern Ireland;

"UK Market Abuse Regulation"                   the Market
Abuse Regulation (Regulation 596/2014) (as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018, as amended);

"uncertificated
form"
Ordinary Shares recorded on the share register as being held in uncertificated
form in CREST and title to which, by virtue of the CREST Regulations, may be
transferred within the CREST settlement system;

"US" or
"USA"
the United States of America, each State thereof (including the District of
Columbia), its territories, possessions and all areas subject to its
jurisdiction; and

"Vendor
Loans"
loans with an aggregate value of €6 million to be made at Completion by the
Sellers to Mpac Bidco in connection with the Acquisition, further details of
which are set out in this Announcement.

 

Important Notices

Shore Capital is authorised and regulated by the FCA in the United Kingdom and
is acting exclusively for Mpac and no one else in connection with the Placing,
and Shore Capital will not be responsible to anyone (including any Placees)
other than Mpac for providing the protections afforded to its clients or for
providing advice in relation to the Placing or any other matters referred to
in this Announcement.

Panmure Liberum is authorised and regulated by the FCA in the United Kingdom
and is acting exclusively for Mpac and no one else in connection with the
Placing, and Panmure Liberum will not be responsible to anyone (including any
Placees) other than Mpac for providing the protections afforded to its clients
or for providing advice in relation to the Placing or any other matters
referred to in this Announcement.

No representation or warranty, express or implied, is or will be made as to,
or in relation to, and no responsibility or liability is or will be accepted
by the Joint Bookrunners or by any of their respective Representatives as to,
or in relation to, the accuracy or completeness of this Announcement or any
other written or oral information made available to or publicly available to
any interested party or its advisers, and any liability therefore is expressly
disclaimed.

The responsibilities of SCC as Mpac's nominated adviser under the AIM Rules
for Nominated Advisers are owed solely to the London Stock Exchange and are
not owed to Mpac or to any Director or to any other person.

This Announcement may contain, or may be deemed to contain, "forward-looking
statements" with respect to certain of Mpac's plans and its current goals and
expectations relating to its future financial condition, performance,
strategic initiatives, objectives and results. Forward-looking statements
sometimes use words such as "aim", "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "seek", "may", "could",
"outlook" or other words of similar meaning. By their nature, all
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances which are beyond the control of Mpac,
including amongst other things, United Kingdom domestic and global economic
business conditions, market-related risks such as fluctuations in interest
rates and exchange rates, the policies and actions of governmental and
regulatory authorities, the effect of competition, inflation, deflation, the
timing effect and other uncertainties of future acquisitions or combinations
within relevant industries, the effect of tax and other legislation and other
regulations in the jurisdictions in which Mpac and its affiliates operate, the
effect of volatility in the equity, capital and credit markets on Mpac's
profitability and ability to access capital and credit, a decline in Mpac's
credit ratings; the effect of operational risks; and the loss of key
personnel. As a result, the actual future financial condition, performance and
results of Mpac may differ materially from the plans, goals and expectations
set forth in any forward-looking statements. Any forward-looking statements
made in this Announcement by or on behalf of Mpac speak only as of the date
they are made. Except as required by applicable law or regulation, Mpac
expressly disclaims any obligation or undertaking to publish any updates or
revisions to any forward-looking statements contained in this Announcement to
reflect any changes in Mpac's expectations with regard thereto or any changes
in events, conditions or circumstances on which any such statement is based.

No statement in this Announcement is intended to be a profit forecast or
estimate, and no statement in this Announcement should be interpreted to mean
that earnings per share of Mpac for the current or future financial years
would necessarily match or exceed the historical published earnings per share
of Mpac.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQFIFFSIDLLIIS