Business
Acquisition of ARP Group
Acquisition of ARP Group.
About this update from Alumasc Group Plc
[{"type":"text","content":"\n\n25 July 2023\nThe Alumasc Group plc\n(\"Alumasc\" the \"Group\", or the \"Company\")\nAcquisition of ARP Group\nAccelerating the growth strategy through M&A\nAlumasc, the sustainable building products, systems and solutions group, is pleased to announce that it has agreed, subject to regulatory approval, to acquire the entire issued share capital of ARP Group1 (\"ARP\"), a manufacturer and distributor of specialist metal rainwater and architectural aluminium goods, for a maximum cash consideration of £10.0m on a cash and debt free basis, and subject to adjustments for normalised working capital (the \"Acquisition\"). The consideration comprises an initial £8.5m, adjusted for net cash/debt and normalised working capital, payable at completion; with additional consideration, capped at £1.5m, payable subject to ARP's performance over the two years ending November 2024.\nARP marks the first acquisition by Alumasc since 2018 and demonstrates the Group's strategy to supplement organic growth through earnings accretive acquisitions. ARP shares many qualities with Alumasc, including strong relationships with contractors which will complement Alumasc's business model. ARP will broaden the Group's existing product offerings, and augment the routes to market and bring attractive scaling opportunities for both businesses.\nBased in Leicester, ARP was established in 1987, and operates from four facilities totalling over 47,000 square feet, with a team of over 70 experienced staff. ARP's consolidated unaudited results for the year ended February 2023 showed revenue of £10.8m and adjusted EBITDA of £1.3m. Consolidated net assets were £4.5m. The acquisition multiple based on the initial consideration is approximately 6.8x, which is expected to reduce to below 5.0x over the medium term, assuming full payment of the earn out consideration, and achievement of expected operating synergies.\nARP is expected to be immediately accretive to underlying earnings and will be funded from current cash and debt facilities. Following completion of the Acquisition, Alumasc's balance sheet will remain strong, with 30 June 2023 pro-forma net debt representing approximately 0.75x EBITDA.\nThe Acquisition remains conditional upon the UK Competition and Markets Authority (\"CMA\") having indicated that it has no further questions in relation to the Company'...