Michelmersh is pleased to announce that it has acquired the entire issued share capital of Carlton Main Brickworks Limited (“Carlton”) for a net consideration of £31.2 million. The Acquisition is expected to be significantly earnings enhancing for the Group.
Carlton is a highly respected regional brick manufacturer, operating from a 93-acre site brickwork based in Barnsley, Yorkshire. The factory, first established in the 1880’s, currently manufactures up to 37 million wirecut bricks per annum and has a strong product offering that complements the geography and market segment of Michelmersh.
Acquisition Highlights:
– Carlton is being acquired for a gross consideration of up to £38.4 million, which includes the cash balances of Carlton at completion, being £7.2 million. The directors consider the net consideration to the Company of the acquisition to therefore be £3 1.2 million
– Carlton reported audited turnover of £13.1 million and unaudited adjusted EBITDA of £5.6 million after adding backnon-recurring expenses (directors’ emoluments) for the 12 months ended 31 March 2016.
– Carlton is expected to increase Michelmersh’s output to over 100 million bricks per annum, an expected increase of over 40 per cent. to Michelmersh’s current output.
– Michelmersh is funding the acquisition through the issue of ordinary shares in the Company, its own cash resources and new debt facilities provided by HSBC including a £20.0 million term loan, a
£6.0 million RCF and a £1.0 million overdraft facility.
– The Acquisition will give Michelmersh access to new regional markets, provide opportunities for cross selling and product synergies and increase output efficiency. Other operational synergies are expected to benefit the enlarged Group over time.
– The Acquisition is expected to be si gnificantly earnings enhancing in the current financial year and increase the overall operational cash flow of the Company going forward, assisting in, post debt servicing and repayment, further investment within the Group and future shareholder distributi ons.
The Board considers that the acquisition of Carlton is a n important strategic step forward in the growth of the Company, adding significant scale, output and earnings to the Group. Michelmersh’s turnover and profit before tax will be immediately enhanced by the addition of Carlton.
The acquisition gives the Company the ability to expand its quality product offering in line with our premium-centric core strategy, and consequently will increase the Group’s annual output to 100 million bricks. Furthermore, the addition of Carlton will broaden an already very strong and loyal customer base, giving access to new regional markets with cross sales opportunities and product synergies. Carlton also brings with it a popular and highly regarded RMI focused product line. This itself will give the enlarged Group the ability to strengthen its market offering whilst greatly improving efficiency and output per capita.
The Group welcomes the Carlton team to the business and look forward to building on the significant success already achieved by its dedicated team in Barnsley.
