3rd Nov 2014 16:18
LONDON (Alliance News) - Plastics Capital PLC Monday said it has agreed to acquire Flexipol Packaging Ltd for up to GBP10.64 million in cash and has raised GBP5 million in an oversubscribed share placing to partly fund the acquisition.
The plastics products manufacturer said the acquisition will "compliment its existing packaging business" and is expected to result in near-term cost synergies and long-term cross-selling opportunities.
Flexipol manufactures high-strength industrial packaging, such as films and bags, for end-markets including food and animal feed packaging. In the financial year ended November 1, 2013, it generated revenue of GBP14.9 million and a pretax profit of GBP1.1 million.
Plastics Capital said it placed 5.1 million new shares with new and existing investors at a price of 98 pence per share, raising GBP5 million before expenses. It said it will use the funds to part finance the acquisition of Flexipol Packaging. It said the placing was at a 4.4% discount.
The company's shares were trading 0.5% higher Monday afternoon at 103.00 pence.
Plastics Capital said that, in addition to the share placing proceeds, the acquisition will be financed through a GBP5.4 million extension of its existing debt facility with Barclays PLC and GBP0.5 million from existing cash resources.
"This acquisition meets our criteria. [Flexipol] is complementary to Palagan, and this should enable us to extract significant synergies in due course through cross selling, operational efficiencies and raw material cost savings," said Plastics Capital Chairman and Chief Executive Officer Faisal Rahmatallah in a statement.
The company's packaging division is currently comprised of two businesses: C&T Matrix Ltd and Palagan Ltd.
Plastics Capital said the GBP10.64 million acquisition price for Flexipol is based on GBP9.82 million payable in cash on completion and GBP0.82 million in earn-out payments based on earnings targets.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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