REG - SIG PLC - Acquisition of Miers Construction Products Limited

SIGAnnouncement

25/07/2022 07:00

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RNS Number : 5252T  SIG PLC  25 July 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE
MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON
THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED
IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

 LEI: 213800VDC1BKJEZ8PV53  25 July 2022

 

 

SIG plc

(the "Company" or "SIG")

 

Acquisition of Miers Construction Products Limited

 

SIG, a leading supplier of specialist insulation and sustainable building
products to customers across Europe, announces that, on 22 July 2022, it
acquired the entire issued share capital of Miers Construction Products
Limited ("MCP") for an initial cash consideration of £28m on a debt-free and
cash-free basis (the "Acquisition"). A further contingent cash payment of up
to £6.7m will be payable, subject to the performance of the business during
the period ending on 31 December 2023, together with a deferred cash payment
of £1.8m, payable in 24 months. The consideration will be funded from the
Company's existing facilities.

 

Transaction Highlights

 

·    Acquisition of one of the UK's leading suppliers of specialist
construction materials, broadening SIG's UK offering in high-performance
construction accessories and fixings

·    Strong strategic fit with SIG's proven business model of
entrepreneurial teams, delivering superior service through deep supplier
partnerships and specialist expertise

·    Strengthens existing relationships with key end-users, serving
complementary customer and supplier groups across a number of key sectors
including Infrastructure and Private New Residential

·    Significant growth opportunities across the combined business, driven
by SIG's national supply network and extensive product range together with
MCP's strong global supply chain and supplier agreements

·    MCP was acquired by the Company from two founding shareholders and
four members of MCP's management team. The existing management team, which has
delivered MCP's strong sales growth of c.20% CAGR in recent years, are
remaining with the business. MCP will continue to trade under its existing
brand

 

Financial Highlights

 

·      Total potential consideration of £36.5 million(1) on a
cash-free and debt-free basis represents a multiple equivalent to 7.1x MCP's
LTM Adjusted EBITDA(2). Fixed consideration of £29.8m represents a multiple
equivalent to 5.8x MCP's LTM Adjusted EBITDA(2)

·      The Acquisition is expected to be immediately accretive to SIG's
underlying earnings per share as well as to the Company's operating margins.
MCP generates c.9%(3) operating margin

·      ROIC is expected to exceed SIG's WACC in the first full year of
ownership

 

Commenting on the Acquisition, Steve Francis, Chief Executive Officer of SIG,
said:

 

"We are delighted to announce the acquisition of MCP, which demonstrates
delivery of SIG's Group strategy to grow both organically and through
carefully targeted value-enhancing acquisitions. MCP is a highly attractive
specialist business with a strong brand, a great reputation for quality
service, and technical sector specialism and expertise. These key elements
have created a business that has the ability to grow sustainably ahead of the
market. MCP illustrates the opportunities to accelerate through acquisition
our path to 5% margins in the medium term. We welcome MCP's knowledgeable and
committed management team and employees to SIG and look forward to working
with them."

 

MCP Overview

 

Established in 2010, MCP is a leading provider of specialist construction
products to specialist sub-contractors, builders and main contractors. MCP has
a proven track record of delivering growth ahead of the underlying UK
construction market. Despite the disruption caused to both operations and the
market by Covid-19, MCP delivered revenue CAGR of c.20% from 2019 to 2021
(£32.3m in 2019 to £46.7m in 2021).(4)

 

For the year ended 30 September 2021, MCP reported revenue of £46.7m and
operating profit of £4.4m.  As at 30 September 2021, MCP had gross assets of
£23.5m(4). The business has continued to perform strongly in the current
year, with (unaudited) revenue of £55.5 million and adjusted EBITDA(2) of
£5.1m for the 12 month period to 31 May 2022.

 

 

Notes:

1.     To be adjusted via customary closing mechanism in due course.

2.     Based on unaudited Management Accounts for the year to 31 May 2022.
Adjusted EBITDA is operating profit after adjusting items and
amortisation/depreciation and excludes the impact of any synergies.

3.     Operating profit margin per audited statutory accounts to 30
September 2021.

4.     Audited statutory accounts to 30 September.

 

 

 SIG plc                                           +44 (0) 114 285 6300
 Steve Francis     Chief Executive Officer
 Ian Ashton        Chief Financial Officer

 FTI Consulting                                    +44 (0) 20 3727 1340
 Richard Mountain

 Peel Hunt LLP - Joint broker to SIG               +44 (0) 20 7418 8900
 Mike Bell / Charles Batten

 Investec Bank plc - Joint broker to SIG           +44 (0) 20 7597 5970
 Bruce Garrow / David Anderson

 

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Andrew Watkins, Group General Counsel & Company
Secretary.

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