LONDON (Alliance News) - Dignity PLC, the London-listed funerals company, Tuesday said it is spending GBP38 million in cash on expanding its funeral network.
In a statement, Dignity said it is acquiring 38 of 83 locations currently served by Laurel Funerals.
"This acquisition will allow us to extend our funeral network further into areas that we do not currently serve. It represents an excellent investment for Dignity, using cash already held by the group, and supports our continued growth," Chief Executive Mike McCollum said in a statement.
Separately, Dignity said it has arranged a GBP26.25 million debt facility with Royal Bank of Scotland PLC, part of Royal Bank of Scotland Group PLC, which will be secured against assets including those being acquired. Dignity said the debt wasn't required to fund the acquisition. The facility must be repaid in four years' time, though the maturity can be extended.
Dignity said it is only acquiring funeral locations in parts of the UK that "complement its own geographic spread" so as to avoid any concerns about competition.
"They specifically do not breach any of the established tests that are used as preliminary filters by the Competition and Markets Authority to see whether a transaction might give rise to prima facie competition concerns in local markets in acquisitions of funeral businesses. Consequently, Dignity is not acquiring 47 funeral locations operated by Laurel, nor its head office function," Dignity said.
Earnings before interest, tax, depreciation and amortisation from the locations being acquired were GBP4.1 million in 2014. Dignity expects to undertake GBP2.0 million in capital expenditure for upgrade work in the first two years of owning the new locations.
"Dignity anticipates that the integration of Laurel will involve limited reorganisation costs and minimal increase in overheads," the company said.
It expects EBITDA from the acquisition in 2015 and 2016 to be "broadly flat" on 2014. Dignity said it assumed no cost savings.
Dignity expects to complete the acquisition on or around July 13.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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