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Norcros acquires Abode for 4.8m

Abode Products

Norcros, the market leading supplier of innovative branded showers, taps, bathroom accessories, tiles and adhesives, is pleased to announce that it has completed the acquisition of 100% of the share capital of Abode Home Products Ltd a privately-owned business held by Croneta S.A., a company incorporated in Switzerland, and Managing Director Darren Holliday, for a total consideration of £4.8m, of which £3.9m has been settled in cash and £0.9m is payable in the year to 31 March 2019. The acquisition has been funded entirely by debt through existing facilities.  The Board expects the transaction to be earnings enhancing immediately.

Abode is a leading niche designer and distributor of high quality kitchen taps, bathroom taps, and kitchen sinks. The business has strong customer relationships and market positions in both the UK branded and own-label segments. Abode's leading edge product design, quality, technical innovation and service are the key drivers of Abode's success to date. 

Abode is based in Barnsley, South Yorkshire, employs 21 people, and has an experienced management team led by Managing Director Darren Holliday, all of whom will be staying with the business. 

Further information on Abode can be found at http://www.abodedesigns.co.uk

Abode - financial information

For the year ended 30 June 2015, Abode's audited financial statements showed revenue of £9.9m, profit before tax of £0.7m, and adjusted EBITDA of £0.6m. As at 30 June 2015 Abode had gross assets of £5.3m. For the 12 months to 29 February 2016, the unaudited adjusted EBITDA was £0.8m.

Acquisition details

Norcros has acquired 100% of the share capital of Abode for an initial cash consideration of £3.9m plus deferred consideration of £0.9m payable in the year to 31 March 2019, these figures being subject to finalisation of completion accounts. The consideration includes a payment of £0.4m for net cash balances and normalised working capital adjustments, such that on a debt free, cash free, normalised working capital basis, the consideration is £4.4m. This represents 5.5 times the unaudited adjusted EBITDA for the 12 months to 29 February 2016. The Group has incurred acquisition related costs of £0.2m as a result of the transaction. 

In addition to this, a long term incentive scheme has been put in place for Managing Director Darren Holliday which will pay up to £0.4m dependent on the financial performance of Abode over the next three years. Costs associated with this incentive will be treated as an acquisition related cost outside of underlying operating profit.

Acquisition rationale

The acquisition of Abode is a further step in the Group's growth strategy to increase revenue to £420m by 2018 and follows on from the successful integration of the Vado and Croydex businesses which Norcros acquired in March 2013 and June 2015 respectively. Adding the Abode business to our existing portfolio will increase the breadth of our product range in the kitchen and bathroom segments. The business will also benefit from the global distribution channels, sourcing skills and strong financial position of the enlarged Group. 

Commenting on the acquisition, Nick Kelsall, Group Chief Executive, said "The Abode business is an excellent strategic fit with our current portfolio, broadening the Group's product offer as well as providing a number of opportunities to drive revenue and procurement synergies.  I look forward to working with Darren and the team to further develop and grow the business." 

Darren Holliday, Managing Director of Abode remarked "This transaction marks a new and exciting chapter for the Abode business and I am confident that being part of Norcros will enable us to accelerate the strong progress we have made over the last few years."

Source: Norcros Press Release.

01 April 2016

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