TIDMPLP
RNS Number : 2442O
Polypipe Group PLC
01 October 2019
1 October 2019
Polypipe Group PLC
Acquisition of ALDERBURGH Group of companies
Polypipe Group plc ("Polypipe", the "Company" or the "Group"), a
leading provider of sustainable water and climate management
solutions for the built environment, today announces the
acquisition of the Alderburgh Group of companies ("Alderburgh"), a
leading designer, manufacturer and installer of plastic injection
moulded stormwater attenuation tanks, structural waterproofing and
geocellular membranes, gas barrier and ventilation materials,
supplying the UK, Irish and Scandinavian markets, for a total cash
consideration of GBP14 million on a cash and debt free, normalised
working capital basis.
Key highlights
-- A good strategic and cultural fit, broadening Polypipe's
Water Management Systems (WMS) offer, in particular the Versavoid
stackable attenuation cell system and Pluvial cube system,
complementing Polypipe's Polystorm and Permavoid ready-assembled
attenuation systems
-- A solid track record of growth, profitability and successful
cash flow generation
-- Through its Solutek specialist installation service, provides
Polypipe exposure to the high-growth supply and fit market for
assemble on site systems, having to date competed mostly in the
supply-only part of the market
-- Versavoid and Pluvial cube are made from recycled plastic,
increasing the Group's overall use of recycled materials and
reinforcing its ESG credentials
-- Potential for cost and revenue synergies identified
-- Well-invested business with state-of-the-art facilities
-- Expected to be EPS accretive and deliver returns in excess of
our cost of capital in the first full financial year of
ownership
Commenting on the acquisition, Martin Payne, Polypipe Chief
Executive Officer, said:
"The acquisition of Alderburgh is another step forward in the
Group's stated strategy of filling product gaps and adjacencies,
expanding our platform and market reach in the UK, and providing a
"one stop shop" for our customers. Like other parts of our
business, the Water Management Systems market is being positively
impacted by legislative change, and this acquisition gives Polypipe
further exposure to this growing segment of the market. Alderburgh
will be integrated into Polypipe's Commercial and Infrastructure
Systems segment, where we will focus the capabilities and synergies
of the combined group to drive growth. We are delighted to welcome
Alderburgh's management and employees to Polypipe. With our solid
organic growth drivers, successful acquisitions track record, and a
continued healthy pipeline of bolt on acquisitions, the Board
believes we have a clear, deliverable strategy that will continue
to create excellent shareholder value."
The Alderburgh business
Alderburgh is a leading designer, manufacturer, and installer of
plastic injection moulded stormwater attenuation tanks, structural
waterproofing and geocellular membranes, gas barrier and
ventilation materials, supplying mainly to the to the UK
market.
Alderburgh sells products across six distinct categories, with
c.80% of revenues derived from its geocellular attenuation systems,
the stackable Versavoid system, and the Pluvial cube system. These
products help address the requirements of the Sustainable Urban
Drainage regulations by creating load-bearing tanks underground to
store stormwater and let it drain away naturally, rather than
letting stormwater rush into the watercourse creating flood events
downstream.
Unlike Polypipe's Polystorm and Permavoid systems which are
manufactured as single finished cells, Alderburgh's Versavoid
system is a stackable system, which means individual parts of the
cell can be nested for transportation and assembled on site, which
in certain situations can provide a more cost effective and lower
carbon emission solution. Furthermore, through its Solutek
specialist installation service, Alderburgh offers a supply and fit
solution to customers, something that has become increasingly
popular in recent years and that to date Polypipe has not
participated in.
The business is based in Rochdale, Lancashire, UK, where it has
a 68,000 sq ft manufacturing facility mainly injection moulding the
geocellular attenuation cells. It has approximately 100 employees
across sales, R&D, despatch and manufacturing functions.
Alderburgh has a solid track record of growth, profitability and
successful cash flow generation. For the year to 30 September 2019,
the business is forecast to generate revenue of GBP17.0 million and
adjusted EBITDA of GBP2.1 million.
Acquisition rationale
The acquisition is in line with Polypipe's strategy of
broadening its market reach in water and climate management
solutions, providing a "one stop shop" for our customers, and
exploiting the key growth drivers of legislative tailwinds and
legacy material substitution. Furthermore, it provides exposure to
the emerging high-growth supply and fit market, which Polypipe can
leverage further. Alderburgh is well-positioned to capitalise on
these growth drivers given its range of differentiated,
value-adding product and service offering that is complementary to
Polypipe's existing capabilities and will enhance Polypipe's
market-leading positions in the water and climate management
spaces.
Polypipe's management expects that acquiring Alderburgh will
enable both companies to leverage their respective technical,
selling and distribution capabilities and expertise to accelerate
growth. There are opportunities for both cost and revenue
synergies, including, but not limited to, a broader combined
product offering and raw material savings.
It is anticipated that the operational management of Alderburgh
will remain with the combined business.
Terms of the transaction
The total consideration of GBP14m million on a cash and debt
free, normalised working capital basis comprises the entire issued
share capital of Alderburgh Ltd., Alderburgh Ireland Ltd., Solutek
Environmental Ltd. and Environmental Sustainable Solutions Ltd.
from Peter Davidson and others. The transaction will be funded by a
combination of existing cash from the balance sheet and drawdown
from existing debt facilities, with proceeds paid on
completion.
The Company expects the acquisition to be earnings accretive in
the first full year of ownership, delivering an attractive return
on investment in excess of its cost of capital.
Contacts
Polypipe 44 (0) 1709 770 000
Martin Payne, Chief Executive Officer
Paul James, Chief Financial Officer
Brunswick 44 (0) 20 7404 5959
Nina Coad
Dan Roberts
IMPORTANT NOTICE
This announcement includes certain forward-looking statements
which are based on Polypipe's or, as appropriate, its directors'
current expectations and projections about future events. These
forward-looking statements speak only as of the date of this
announcement and are subject to risks, uncertainties and
assumptions about Polypipe, the Group and the Alderburgh Group of
companies. The events or circumstances referred to in the
forward-looking statements may differ materially from those
indicated in these statements, and you should not place undue
reliance on these forward-looking statements as a prediction of
actual results or otherwise. Nothing in this announcement should be
taken as a forecast, estimate or projection of the future financial
performance of Polypipe, the Group or the Alderburgh Group of
companies. No undertaking is given to publicly update or revise any
such forward-looking statement, whether as a result of new
information, future events or otherwise.
NOTES TO EDITORS
Polypipe Group plc ("Polypipe", the "Company" or the "Group"), a
leading provider of sustainable water and climate management
solutions for the built environment, is the largest manufacturer in
the UK, and among the ten largest manufacturers in Europe, of
plastic piping systems for the residential, commercial, civils and
infrastructure sectors by revenue. It is also a leading designer
and manufacturer of energy efficient ventilation systems in the
UK.
The Group operates from 18 facilities in total, and with over
20,000 product lines, manufactures the UK's widest range of plastic
piping systems for heating, plumbing, drainage and ventilation. The
Group primarily targets the UK and European building and
construction markets with a presence in Italy, the Netherlands and
the Middle East and sales to specific niches in the rest of the
world.
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 or visit www.rns.com.
END
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