8th Apr 2005 08:04
Blueheath Holdings PLC08 April 2005 For Immediate Release 8th April 2005 Blueheath Holdings plc Acquisition of CTM Wholesale Ltd Blueheath, the national delivered wholesaler which uses sophisticatedproprietary technology to offer a substantial cost advantage over establishedplayers in the £16.4 billion grocery wholesale sector, is today pleased toannounce the acquisition of CTM Wholesale Limited ("CTM") for up to £4.9 millionin cash (the "Acquisition"). CTM is a traditional delivered wholesale business to the grocery wholesalemarket and also has a small cash and carry operation. It operates from a singlewarehouse depot located in Wrexham, Wales. For the year ending 2 April 2005, CTMis expected to report turnover of £45.0 million, operating profit of £0.5million and net assets of £3.4 million. Of the total cash consideration, £3.9 million is payable on completion, withthe remaining £1.0 million paid into a retention account to be released on theanniversary of completion of the Acquisition dependent on, amongst othermatters, the net operating assets of CTM as at completion. Rationale for and benefits of, the CTM Acquisition: O CTM represents an opportunity to supplement the organic growth of the Company through the acquisition of a traditional regional delivered wholesaler. O CTM currently operates with stock levels of approximately 22 days. By utilising Blueheath's sophisticated proprietary technology, the Directors of the Company anticipate that this can be significantly reduced down towards the Company's normal operating levels, thereby releasing significant working capital. O CTM supplies delivered wholesale to around 1,000 retail outlets within Wales, providing a complementary fit with Blueheath's existing customer network. O The Directors anticipate the Enlarged Group will be able to achieve improved operating margins through combined buying volumes, the application of Blueheath's technology and business processes to the CTM operation, and the integration of central overheads. Commenting on the acquisition, Douglas Gurr, Chief Executive of Blueheath said: "We are delighted with the acquisition of CTM which represents an important stepin our strategy of building a leading national delivered wholesaler. Thecombination of CTM's excellent customer franchise and strong local managementwith Blueheath's unique technology-driven business model offers a number ofcomplementary synergies to the enlarged group and further strengthensBlueheath's position in the delivered wholesale market." Financing of the Acquisition In order to finance the Acquisition the Company is proposing to raise£6,000,003.50 (before expenses) through a vendor placing and cash placing of3,870,970 new ordinary shares ("New Ordinary Shares") by Evolution Securities(as agent for the Company) with institutional investors (the "Placing"). Of thetotal cash consideration payable by Blueheath, £3.9 million will be funded bythe net proceeds of the vendor placing of 2,516,130 New Ordinary Shares, whichwill be paid directly to the vendors. The balance of the cash consideration willbe satisfied by the net proceeds of the cash placing of 1,354,840 New OrdinaryShares. The placing price of 155p pence per New Ordinary Share represents adiscount of 4.62 per cent to the closing mid market price of 162.5 pence perOrdinary Share at the close of business on 7 April 2005, being the latestpracticable date prior to this announcement. The New Ordinary Shares represent approximately 9.34 per cent of the Company'sexisting issued share capital and approximately 8.54 per cent. of the Company'sissued share capital following the Placing. The New Ordinary Shares will rankpari passu in all respects with the existing ordinary shares of the Company. ThePlacing has been fully underwritten by Evolution Securities and is conditionalon, inter alia, the Admission of the New Ordinary Shares to trading on theAlternative Investment Market of the London Stock Exchange ("AIM"). Accordingly, application will be made to the London Stock Exchange for thePlacing Shares to be admitted to trading on AIM. It is expected that Admissionwill become effective and dealings in the Placing Shares will commence on AIM on14 April 2005. Blueheath Holdings plc Douglas Gurr, Chief Executive Tel: 020 7689 2455 Simon Mindham, Finance Director Tel: 020 7689 2464 Buchanan Communications Tel: 020 7466 5000 Mark Edwards / Nicola Cronk / Tom Carroll email: [email protected] Evolution Securities Tel: 020 7071 4300 Michael Brennan / Bobbie Hilliam Notes to editors: Blueheath is a wholesaler of groceries to convenience stores in the £16.4billion UK grocery wholesale sector. The Group sells and arranges thedistribution of approximately 3,100, primarily ambient, product lines to over1,600 independent and multiple retail and leisure outlets within the UK.Blueheath's innovative technology-driven business model is founded on the basicprinciples of stripping out unnecessary supply chain costs and overheads andpassing on financial and operational benefits to customers. This enablesBlueheath to offer customers a wholesale delivery service of groceries at closeto Cash & Carry prices. Blueheath achieves cost savings in three ways: 1. Operating on low stock levels through the use of sophisticated, proprietary stock prediction technology. 2. Using spare distribution capacity through its partnership with British Bakeries Ltd and other operators. 3. The extensive use of process automation to minimise administration costs. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Booker Group