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Norcros agrees to buy Merlyn Industries for 60m

Merlyn Showering

Norcros PLC, owner of Johnson Tiles, Triton Showers and Croydex has agreed to acquire Merlyn Industries, the Irish based, branded shower enclosure designer and distributor for a total consideration of £60m on a debt free, cash free basis.

A spokesperson for Norcros said it would be a “strategically and financially compelling” transaction for the company and It would result in the addition of a number of “well-established and market leading” brands to the group's existing portfolio.

At the same time, the company announced its intention to conduct a firm placing, and a placing and open offer to raise gross proceeds of £31.4m, to part-fund the acquisition through the issue of 18,254,161 new ordinary shares in Norcros at a price of 172p per share.

Merlyn reportedly enjoys established multiple sales channels, which would provide end market diversification and future growth opportunities, with its management team to be retained, led by Charlie Soden.

In the financial year to 31st March 2017, Merlyn reported revenues of £30.7m and an operating profit of £6.4m, the Norcros board pointed out, adding that the acquisition was consistent with its strategy to “enhance” its bathroom product portfolio.

“The acquisition of Merlyn with its premium brands and market leading positions is an exciting addition to the group, substantially broadening our bathroom product offering,” said Norcros group chief executive Nick Kelsall. “Merlyn's focus on design, new product development and its standard of customer service will significantly enhance the group's portfolio.

“I look forward to working with Charlie and his team, whose experience and enthusiasm for the business has impressed greatly, as we look to grow and develop the Merlyn business further.”

Norcros explained that, with the firm placing, and the placing and open offer, the placing price represented a discount of 5.9% to the closing price on 1 November.

“I have admired what Nick and his team have achieved at Norcros, growing the business both organically and through its acquisition strategy,” said Merlyn founder and majority shareholder Michael Hoyne.

“I am sure that Charlie and the team will embrace the opportunities that being part of the enlarged Norcros family with its range of channels, products and international breadth will bring, as they look to drive the Merlyn business on to the next level.”

Source: Insight DIY Team

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02 November 2017

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