REG - Supreme PLC - Acquisition of Typhoo Tea for £10.2 million

SupremeAnnouncement

02/12/2024 07:00

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RNS Number : 2777O  Supreme PLC  02 December 2024

2 December 2024

 

Supreme plc

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

 

Acquisition of Typhoo Tea for £10.2 million

 

-      Strategic acquisition of leading consumer brand further
diversifies Supreme

-      Generates significant cross and upsell sales opportunities across
the Group

-      Transaction expected to be adjusted earnings enhancing

 

Further to its announcement of 28 November 2024, Supreme (AIM: SUP), a leading
manufacturer, supplier, and brand owner of fast-moving consumer goods, is
pleased to announce the acquisition of the trade and selected assets of Typhoo
Tea Limited ("Typhoo Tea"), a long-established and well-known British tea
brand, for a total cash consideration of £10.2 million (the "Acquisition")
out of administration. The deal includes Typhoo Tea's stock and trade debtors
with a book value of £7.5 million and Supreme expects the integration of the
business to proceed without disruption to existing operations or customer
service levels.

 

Established in 1903, Typhoo Tea was the first pre-packaged tea brand in the UK
and has since expanded its product offering from traditional black and
decaffeinated black teas to now include white and lemon instant flavours,
herbal and fruit tea infusions, and a selection of coffees across a portfolio
of brands including the iconic Typhoo brand but also QT, Lift, and Heath &
Heather. Today, Typhoo Tea supplies all the major UK supermarkets and
discounters as well as health food store, Holland & Barrett. Typhoo Tea
also distributes products into both the Ministry of Defence and the NHS,
alongside servicing international customers across North America, EMEA and
Southeast Asia.

 

For the year ended 30 September 2024, Typhoo Tea generated unaudited revenue
of approximately £20 million and a loss before tax of approximately £4.6
million. Under Supreme's ownership, it is anticipated that Typhoo Tea will
operate on a capital light, outsourced manufacturing model, which the Board
believes can generate a gross profit margin of around 30%, with a much reduced
overhead base. As with previous transactions, Supreme expects the Acquisition
to be adjusted earnings-enhancing.

 

Strategic Rationale

 

·    The Acquisition will further accelerate Supreme's broader
diversification strategy, bringing non-vape annualised sales to over £120
million (c. 50% of Group revenue)

·    Typhoo Tea is a well-recognised UK consumer staple with 73% brand
awareness and a high-quality customer list

·    Typhoo Tea's established asset-light, outsourced model will be
further enhanced by Supreme's existing vertically integrated distribution
platform, which already services a number of existing customers

·    The combination of Typhoo Tea's product set, alongside Supreme's Soft
Drinks and Sports Nutrition & Wellness categories, will enable the Group
to further develop sales, marketing and product innovation opportunities,
including:

o  Additional sales across Supreme's established customer footprint of
supermarkets, discounters, wholesalers and online retailers

o  Development of additional own-label products or licences under
well-recognised brands, replicating Supreme's long-standing success in the
Batteries and Lighting categories

·    The Acquisition will immediately broaden Supreme's UK retail network,
adding more high street names including Holland & Barrett which could
generate sales opportunities across multiple Supreme categories and product
areas

 

Sandy Chadha, Chief Executive Officer of Supreme, commented:

 

"The acquisition of Typhoo Tea marks a significant step in our broader
diversification strategy and brings one of the most iconic UK consumer brands
into the Supreme family. I believe Typhoo Tea will thrive under our ownership,
further benefitting from Supreme's significant market reach and successful
track record in creating brand loyalty, making us an ideal fit for this
business.

 

Having established our Soft Drinks division earlier in the year, we believe
the addition of Typhoo Tea and its highly complementary blend of great value
and premium tea brands, creates tangible cross sell and product innovation
opportunities in the near-term, alongside avenues into credible UK retailers
that Supreme has been looking to partner with.

 

We look forward to welcoming Typhoo Tea into the Supreme family 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

 Shore Capital (Nominated Adviser and Joint Broker)                  +44 (0)20 7408 4090

 Mark Percy / David Coaten / Rachel Goldstein - Corporate Advisory

 Ben Canning - Corporate Broking

 Zeus (Joint Broker)                                                 +44 (0)161 831 1512

 Jordan Warburton / Alex Campbell-Harris - Investment Banking

 Benjamin Robertson - Corporate Broking

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

 Jeremy Garcia / Kendall Hill / Anna Stacey

 supreme@vigoconsulting.com

 

About Supreme

 

Supreme supplies products across six categories; Batteries, Lighting, Vaping,
Sports Nutrition and Wellness, Branded Distribution and Soft Drinks. 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 3,000 active business accounts with retail customers who
manage over 10,000 branded retail outlets. Customers include B&M, Home
Bargains, Poundland, Tesco, Sainsbury's, Morrisons, Amazon, The Range,
Costcutter, Asda, Halfords, Iceland, Waitrose, Aldi 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, Black & Decker and JCB licences across 45 countries,
Supreme has also developed brands in-house, most notably 88Vape, has a growing
footprint in Sports Nutrition and Wellness via its principal brands Sci-MX and
Battle Bites, and has recently expanded into the soft drinks market with the
acquisition of Clearly Drinks, adding established brands such as Perfectly
Clear and Northumbria Spring to its portfolio.

 

https://investors.supreme.co.uk/
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