Business
Disposal of Education & Care division
Disposal of Education & Care division.
About this update from Smiths News Plc
[{"type":"text","content":"\n \nRNS Number : 1770W Connect Group PLC 07 February 2017 \n\nThis announcement contains inside information\n \nConnect Group PLC\n('Connect Group' or 'the Group')\n \nDisposal of Education & Care division to RM plc for £64.4m enterprise value\n \nConnect Group PLC, a leading specialist distributor, announces that it has signed an agreement with RM plc (\"RM\") to dispose of its Education & Care division (\"Education & Care\"), for a cash consideration of £56.5m on a cash free, debt free basis. RM will also assume responsibility for the defined benefit pension schemes within Education & Care which at 31 August 2016 had a balance sheet deficit of £7.9m1. Total consideration equates to an enterprise value of £64.4m.\n \nHighlights\n \n· The disposal is consistent with the Group's strategy to focus its primary investment on growth opportunities within News & Media and Parcel Freight.\n \n· Education & Care's EBITDA for the 12 months to 31 August 2016 was £9.0m. Adjusted profit before tax was £7.8m, while statutory profit before tax was £6.7m. The value of the gross assets at 31 August 2016 was £57.4m.\n \n· The net cash proceeds of the disposal will reduce Group borrowings and provide greater flexibility to pursue growth opportunities that can leverage the Group's scale and strength in specialist distribution.\n \n· The disposal will complete following approval from RM's shareholders and receipt of clearance from the Competition & Markets Authority. A further update will be provided at Connect Group's interim results on 25 April 2017.\n \n· Education & Care is an independent supplier of consumable products to the Education and Care markets, trading through The Consortium and West Mercia Supplies brands. It currently serves over 30,000 customers with an extensive range of over 40,000 products.\n \nFinancial Highlights\n \n· Enterprise value of £64.4m, equating to a 7.2x multiple on 2016 EBITDA. This comprises cash proceeds of £56.5m and an assumed value of £7.9m1, on an IFRS basis, for the transfer of Education & Care's pension schemes liability.\n \n· The Grou...