31st May 2016 08:15
LONDON (Alliance News) - Dignity PLC on Tuesday said it signed a conditional sale and purchase agreement to acquire five crematoria currently operated by Funeral Services Ltd, which trades as Co-op Funeralcare, for GBP43 million in cash.
The London-listed funeral services provider said the crematoria are located in markets not served by existing Dignity crematoria. The acquisitions will be funded with existing cash resources.
Dignity, which currently operates 39 crematoria throughout the UK, said it has extended the availability period of its GBP26.3 million debt facility with the Royal Bank of Scotland PLC until December 31, even though the debt isn't required to fund the acquisition.
The locations being acquired generated earnings before deducting interest, taxation, depreciation and amortisation of GBP2.9 million in the year ended January 3, 2016. The unaudited gross assets of the locations being acquired as of that date were about GBP10.9 million.
Allowing for the integration, Dignity expects the annualised Ebitda from the acquisition in 2017 to be broadly flat on the actual financial performance achieved in the 12 months to January 3, 2016, with no cost savings assumed. The company expects the acquisition to boost earnings in the financial year ending December 2017.
"This acquisition will allow us to extend our crematoria network into new geographical areas. It represents a good investment for Dignity, using cash already held by the group, and supports our continued growth," Chief Executive Mike McCollum said in a statement.
Three of the locations are freehold - Glasgow, Sheffield and Lichfield - with the other two leased from and managed on behalf of Local Authorities - Shropshire and Stockport.
Completion of the acquisition of the freehold locations is conditional on the transfer of trade and assets of the relevant locations to a new entity, which is expected to complete on or around July 5, Dignity said in a statement, with that for the leasehold locations is conditional on consent of the relevant local authority and transfer of the trade and assets of the location to a new entity.
One leasehold location is anticipated to complete on or around July 25, with the other leasehold location due to complete on or around August 1.
Shares in Dignity were down 0.4% at 2,540.00 pence Tuesday.
By Samuel Agini; [email protected]; @samuelagini
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