REG - Supreme PLC - Acquisition of Liberty Flights Holdings Limited

SupremeAnnouncement

13/06/2022 07:00

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RNS Number : 5625O  Supreme PLC  13 June 2022

13 June 2022

 

Supreme plc

("Supreme," the "Company" or the "Group")

 

Acquisition of Liberty Flights for an initial consideration of £7.75 million

 

-      Strategic acquisition of leading vaping manufacturer accelerates
product development and expands UK customer footprint

-      Transaction will deliver earnings growth alongside synergy
benefits and cost savings

 

Supreme (AIM:SUP), a leading manufacturer, supplier, and brand owner of
fast-moving consumer products, announces the acquisition of Liberty Flights
Holdings Limited ("Liberty Flights"), a leading UK vaping manufacturer best
known for their Liberty Flights vaping brand and the market-leading Dot Pro
device, for an initial consideration of £7.75 million plus deferred
consideration of £2 million, in addition to a performance related earn-out
(the "Acquisition").

 

Founded in 2010, Liberty Flights specialises in premium e-liquid and
high-quality vaping devices, alongside distributing a large catalogue of
global third-party e-liquid brands. The brand is sold largely through
convenience retailers, either directly or via wholesalers, as well as through
an expanding direct to consumer online footprint.

 

The Acquisition is firmly in line with the Company's strategy to support a
tobacco free UK by offering both credible and safer alternatives for nicotine
consumption.

 

For the year ended 31 January 2021, Liberty Flights generated revenues of
approximately £9 million and EBITDA of £1.5 million.

 

The Acquisition is expected to be immediately earnings enhancing for the
Group, with Liberty Flights expected to operate as a standalone entity for an
initial 12-month period before being fully integrated into Supreme.

 

All financials for Liberty Flights are unaudited.

 

Strategic rationale

 

·    Immediately earnings enhancing with further manufacturing and
sourcing synergies expected post-integration;

 

·    Significant product and customer overlap with Supreme across the
Group's vaping category with potential to enhance margins across the enlarged
business;

 

 

·   Expands Supreme's access to the closed system vaping market, further
broadening the Group's existing vaping proposition; and

 

 

·    The enlarged product range creates a strong platform from which to
explore a number of cross-sell opportunities across Supreme's existing
customer base.

 

Transaction structure

 

Supreme Imports Limited, a subsidiary of Supreme, will acquire 100% of the
share capital of Liberty Flights on a cash-free debt-free basis, from its
three shareholders, Matthew Moden, Christopher Parker and Abraham Spain, for a
total consideration of up to £14.75 million, which will be funded from the
Company's newly established rolling credit facility with HSBC.

 

The total consideration comprises an £7.75 million cash payment on completion
of the Acquisition, a £2 million deferred payment (payable in 12 months) and
an earn-out to be paid based on performance over a one-year period, subject to
certain stretched performance metrics being met post the Acquisition, of up to
£5 million (under current performance expectations, management estimate this
will be approximately £2 million). The balance sheet of Liberty Flights
carries property with a market value of £1.3 million.

 

Sandy Chadha, Chief Executive Officer of Supreme, commented:

 

"We are delighted to be acquiring Liberty Flights, a business I have
personally known since its inception and a brand I have long admired. The
combination of Liberty Flights and Supreme's existing vape offerings couldn't
be more aligned and is highly complementary across our respective
manufacturing, product, and customer profiles.

 

In addition, the acquisition further builds on our significant market reach in
the UK, accelerating our product presence in the fast-growing pod system
market, a sizeable growth opportunity for Supreme.

 

We look forward to welcoming Liberty Flights into the Supreme group and
updating shareholders on our progress over the course of the current financial
year."

 

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 which is part of UK law by virtue of the European Union (withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

 

Enquiries:

 

 Supreme plc                                                           via Vigo Consulting

 Sandy Chadha, Chief Executive Officer

 Suzanne Smith, Chief Finance Officer

 Grant Thornton UK LLP (Nominated Adviser)                             +44 (0)20 7383 5100

 Samantha Harrison / Harrison Clarke / Daphne Zhang / Samuel Littler

 Berenberg (Broker)                                                    +44 (0)20 3207 7800

 Chris Bowman / Mark Whitmore / Mara Grasso

 Vigo Consulting (Financial Public Relations)                          +44 (0)20 7390 0230

 Jeremy Garcia / Kendall Hill

 supreme@vigoconsulting.com

 

 

About Supreme

 

Supreme supplies products across five key categories; batteries, lighting,
vaping, sports nutrition & wellness, and branded household consumer goods.
The Company's capabilities span from product development and manufacturing
through to its extensive retail distribution network and direct to consumer
capabilities. This vertically integrated platform provides an excellent route
to market for well-known brands and products.

 

The Group has over 3,300 active business accounts with retail customers who
manage over 10,000 branded retail outlets. Customers include B&M, Home
Bargains, Poundland, The Range, Sports Direct, Londis, SPAR, Costcutter, Asda,
Halfords, Iceland and HM Prison & Probation Service.

 

In addition to distributing globally-recognised brands such as Duracell,
Energizer and Panasonic, and supplying lighting products exclusively under the
Energizer, Eveready and JCB licences across 45 countries, Supreme has also
developed brands in-house, most notably 88Vape and has a growing footprint in
Sports Nutrition and Wellness.

 

www.investors.supreme.co.uk

 

 

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