FNT Fountains

 

TIDMCNT TIDMFNT 
 
RNS Number : 0542W 
Connaught PLC 
22 July 2009 
 

Connaught plc 
("Connaught" or the "Group") 
 
 
Acquisition and Vendor Placing 
 
 
Overview 
 
 
On 15 July 2009, Connaught announced its Interim Management Statement along with 
the GBP13.3 million recommended offer for the environmental services business, 
Fountains plc ("Fountains"). At the same time, the Group stated that it was in 
final stage negotiations to acquire two complementary, bolt-on, compliance 
services businesses. 
 
 
Connaught, is now pleased to announce the acquisition of UK Fire (International) 
Limited ("UK Fire") and Igrox Limited ("Igrox") for a combined cost of 
approximately GBP15.9 million (the "Acquisitions"). The consideration payable to 
the sellers has been grossed up to include certain transaction costs in relation 
to the Vendor Placing. 
 
 
The Acquisitions are being made as part of Connaught's stated strategy of 
establishing a national capability in all of its key services in order to 
deliver its integrated compliance solution. Following the Acquisitions, 
Connaught will be able to deliver a fully national offering in all the key 
compliance services including health & safety, environmental, occupational 
health, food hygiene & pest prevention, fire, water, gas and electrical 
inspection and testing, service and maintenance. 
 
 
The consideration for the Acquisitions is to be settled primarily by a vendor 
share placing (the "Vendor Placing") to raise, in aggregate, GBP15.9 million. In 
addition to the Vendor Placing, Connaught has undertaken an additional non 
pre-emptive share placing ("Additional Placing") to raise, in aggregate, GBP12.1 
million. The net proceeds of the Additional Placing will be used to provide the 
Company with the financial flexibility to pursue selected future bolt-on 
acquisitions. In total 8,000,000 new ordinary shares of 2 pence each in the 
capital of Connaught ("New Ordinary Shares") have been placed with certain 
institutional investors at a placing price of 350 pence per share. 
 
 
The Acquisitions, the Vendor Placing and the Additional Placing are each 
unconditional, save admission of the New Ordinary Shares ("Admission"), which is 
expected to occur and trading to commence tomorrow, on 23 July 2009. Application 
for Admission has taken place. 
 
 
Fire services: UK Fire 
 
 
UK Fire is one of the largest independent fire service companies in the UK and 
is being acquired for a total purchase price of GBP12.0 million, subject to 
certain post-completion adjustments. In addition to the headline purchase price 
payable to the sellers, costs of approximately GBP0.5 million will be incurred 
in relation to short-term consultancy agreements and the redundancy of certain 
non-operational executive directors. 
 
 
UK Fire operates from seven depots across England and Wales which service both 
regional and national customers. It provides a range of services including fire 
safety compliance inspection, testing and reporting, fire extinguisher and fire 
alarm system servicing as well as the installation of a wide range of fire 
safety systems. When integrated with the Group's existing fire business, UK Fire 
will establish Connaught as one of the few companies with a fully national fire 
capability and will further enhance our integrated compliance proposition. 
 
 
Connaught has acquired the entire issued share capital of UK Fire, with the 
non-core manufacturing, trade and export activities of the business to be 
retained by the existing shareholders. For the year ended 31 December 2008, UK 
Fire (excluding the non-core operations) generated turnover of GBP10.1 million 
and gross profit after charging depot costs but before central overheads of 
GBP1.35 million. Net assets acquired (excluding non-core operations) comprise 
approximately GBP2.2 million. 
 
 
Pest control: Igrox 
 
 
Igrox provides pest control, prevention and fumigation services on a nationwide 
basis and is being acquired for a purchase price of GBP3.9 million, subject to 
certain post-completion adjustments. 
 
 
Igrox provides a fully comprehensive pest management service including rodent, 
insect and bird control as well as fumigation solutions to over 4,500 private 
and public sector customers, primarily businesses which have to comply with 
stringent food hygiene regulations. When combined with Connaught's existing pest 
business, Igrox will create a significant nationwide pest control capability, 
further enhancing the Group's portfolio of integrated compliance services. 
 
 
Connaught has acquired the entire share capital of Igrox for an initial 
consideration of GBP3.9 million, with additional earn-out payments in 2011 and 
2012 subject to significant performance conditions. For the year ended 31 
December 2008, Igrox generated turnover of GBP7.0 million and adjusted EBITDA of 
GBP0.65 million. Net assets acquired comprise GBP1.8 million. 
 
 
Additional Listing 
 
 
The Group has applied for Admission of the 8,000,000 New Ordinary Shares to be 
listed on the Official List and to be admitted to trading on the London Stock 
Exchange's main market for listed securities. The New Ordinary Shares were 
allotted pursuant to the acquisition documentation in relation to the 
Acquisitions. It is expected that dealings in the new ordinary shares will 
commence at 08.00 on 23 July 2009. 
 
 
Mark Tincknell, Chairman, said: 
 
 
"The acquisitions of UK Fire and Igrox are in line with our stated strategy of 
enhancing the service range and geographic coverage provided by our market 
leading integrated compliance services business. This will further enhance our 
future opportunities in this division and I welcome them to the Group." 
 
 
+------------------------------------+------------------------------------+ 
| Connaught                          |                      01392 444 546 | 
| Mark Tincknell, Chairman           |                                    | 
| Mark Davies, Chief Executive       |                                    | 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Altium                             |                      0161 831 9133 | 
| Phil Adams                         |                                    | 
| Mike Fletcher                      |                                    | 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| KBC Peel Hunt                      |                      020 7418 8900 | 
| Julian Blunt                       |                                    | 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Finsbury                           |                      020 7251 3801 | 
| Faeth Birch                        |                                    | 
| Gordon Simpson                     |                                    | 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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