7th Apr 2008 07:01
Travis Perkins PLC07 April 2008 7 April 2008 TRAVIS PERKINS PLC Travis Perkins PLC invests in Toolstation Limited Acquires 30% with right to purchase remaining 70% after four years Travis Perkins PLC ("Travis Perkins"), the leading builders' merchant and homeimprovement retailer, announces today a further development of its multi-channelstrategy through an investment in Toolstation Limited ("Toolstation"), a rapidlygrowing direct retailer of tools and building materials. Structure Travis Perkins has acquired 30% of Toolstation's equity from its foundingshareholders for £5 million and will provide an initial loan of £7 million toallow Toolstation to repay its outstanding early stage loan capital. TravisPerkins will then provide an additional loan facility to support the growth ofToolstation's business. This facility is expected to be drawn, up to a maximumof £30 million, by Toolstation over the next four years. Drawings under thisfacility are subject to performance conditions related to progress againstToolstation's business plan and all loans will be provided under normalcommercial terms. Geoff Cooper, Travis Perkins' Chief Executive will join theboard of Toolstation. Travis Perkins has the right to purchase the remaining 70% of Toolstation'sequity through an earn-out formula. This gives Travis Perkins the right toacquire the outstanding equity of Toolstation after four years on a multiple ofprofits with payments in 2012 and 2014. The present owners of Toolstation havethe right to require Travis Perkins to acquire the outstanding 70% of its equityat these dates provided that profits are above a minimum threshold. It isexpected that over the next six years cash generated from trading will repay alldrawings under the £30 million loan facility and will create a positive cashbalance by the end of this period. This balance will be retained withinToolstation Limited. Toolstation's turnover in the last 12 months was £21.4 million, with EBITDAbeing breakeven for the same period. Toolstation has gross assets of £12.0million and, for the year ended 31 July 2007, recorded a loss before taxation of£0.3 million. About Toolstation Toolstation was created by Mark Goddard-Watts, a founder of Screwfix, thelargest direct selling operator in this market. Mark and a number of formerexecutives of Screwfix left that business after its acquisition by a chainretailer, and Toolstation was subsequently launched in 2003. Toolstation sells a wide range of tools, fixings, hardware, electrical andplumbing and heating materials to retail and trade customers throughout theUnited Kingdom and through a franchised operation in the Netherlands. Allproducts are included in its catalogue and are in stock and available online(www.toolstation.com), via its UK-based telephone call centre and through all ofits trade counters at very high levels of product availability. Customer ordersplaced online and by telephone before 5.00pm are dispatched for delivery nextbusiness day. Toolstation's facilities comprise a main distribution warehouse with tradecounter in Bridgwater, Somerset and ten more trade counters located across theUK. Toolstation plans to continue its successful strategy of branch networkexpansion, with the aim of operating from at least 80 trade counters within thenext five years. Toolstation currently employs 244 people. Opportunity Travis Perkins will use its buying scale, global sourcing capabilities, supplychain facilities and property expertise with the aim of acceleratingToolstation's rate of growth. Through this investment Travis Perkins has alsoacquired the right to use Toolstation's ecommerce, warehousing and fulfilmentsoftware for direct selling of Travis Perkins' existing merchanting andretailing brands. Travis Perkins has entered into a software and supportcontract with Owtanet, a technology services company related to Toolstation, toassist with implementation of these technologies. Geoff Cooper, Chief Executive of Travis Perkins said; "This investment represents a significant advance in the development of ourmulti-channel strategy. Our customers increasingly expect products from usthrough a variety of distribution channels, delivered to them or collected bythem via a time, place and mechanism that suits their needs. The experiencedToolstation team have already developed one successful business in this marketand we are delighted to be working with them with the aim of creating the marketleader using their skills and our scale and resources." Mark Goddard-Watts, founder and Chief Executive of Toolstation said; "We had planned to find a strategic partner at this stage of our development tosupport and continue our growth and we believe that Travis Perkins' culture andambition perfectly suits our plans. With Travis Perkins' support, we lookforward to continuing to deliver great value products to an increasing number ofcustomers across the UK". Andrew Hodgson, partner at KPMG and advisor to Toolstation said; "Toolstation's management has created a scalable platform for growth which isoutstanding. It was clear from the first contact between Travis Perkins andToolstation that this deal and its structure makes perfect sense for bothsides." Enquiries: Geoff Cooper, Chief ExecutiveTravis Perkins PLC +44 (0)1604 683 222 Neil Carroll, Marketing DirectorToolstation Ltd +44 (0)1278 411 267 David Bick/Mark LongsonSquare1 Consulting Limited +44 (0)20 7929 5599 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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