Mcbride Regulatory News (MCB)

26 Feb 2007 07:03

McBride PLC26 February 2007 McBride plc 26 February 2007 Acquisition of Henkel's European private label household products business McBride plc ("McBride") today announces the proposed acquisition of the whole ofHenkel's European private label household products business which willsignificantly extend McBride's business in key western and central Europeanmarkets and in the growing automatic dishwashing and specialist householdcleaning sectors. Acquisition highlights • In line with McBride's strategy to expand its European business • Enhances McBride's position in the heart of Western Europe and in thegrowing discount distribution channel • Includes a large, modern factory in Luxembourg producing automaticdishwashing products • Provides considerable scope to improve efficiency, working capital andasset utilisation through improved procurement and capacity utilisation andleveraging existing overheads • In the financial year ended 31 December 2006, the businesses to beacquired reported revenues of £92.5 million and Acquired Operating Profit of£4.7 million(1)(2) • Total cash consideration of up to £39.3 million on a debt and cashfree basis, including up to £4.7 million payable subject to meeting certainperformance criteria, to be funded from existing group resources(1) • Expected to enhance earnings per share in the first full financialyear of ownership(3) Information on the acquired business The transaction involves the acquisition from Henkel of Chemolux S.a.r.l ("Chemolux"), a major private label supplier based in Luxembourg, together with asmall private label household products business and relevant assets in the UK(together the "Acquired Business"). Following this transaction Henkel will focuson their core branded products. Chemolux Chemolux is based in Luxembourg and is focused on the production and sale ofautomatic dishwashing tablets and associated products. Automatic dishwashingproducts are produced in both private label and branded formats with privatelabel products sold to Chemolux's end customers and branded products sold toHenkel. McBride will continue with all these activities after the acquisition,including the supply of branded automatic dishwashing products to Henkel under along term manufacturing contract. The business also sells a number of otherproducts, particularly laundry powders and liquids, which are currently sourcedfrom a number of other factories, the production of which is intended totransfer to McBride's existing production facilities over the next two years. Chemolux is active in most major European markets where its main customers arediscount retailers. Chemolux has 270 employees. UK business The UK business and assets are owned by Henkel Limited and include a productionfacility in Coventry. It is a provider of private label household cleaningproducts particularly sold in trigger format and also sources for onward salevarious other private label household products. Its customers are the major UKgrocery retail chains.120 UK employees will transfer to McBride. Financial information In the year ended 31 December 2006, the Acquired Business reported auditedconsolidated revenues of £92.5 million, operating profit of £4.1 million andAcquired Operating Profit of £4.7 million(1)(2). At 31 December 2006, the grossassets of the businesses being acquired were £35.3 million(1). Terms of the acquisition The transaction is to be effected by the acquisition of the whole of the issuedshare capital of Chemolux and the acquisition or transfer of the private labelhousehold products business and certain fixed assets, inventory, contracts andother assets of Henkel Limited. Total consideration for the Acquired Business is up to £39.3 million on a debtand cash free basis, all payable in cash, including up to £4.7 million payableover 12 months from completion, subject to meeting certain criteria includingthe performance of the business(1). The acquisition remains subject to the approval of the German competitionauthorities which is expected to be received by April 2007 at which point thetransaction will complete. Impact of the acquisition The Acquired Business will be fully integrated into McBride's existing WesternContinental Europe and UK divisions. Further, McBride intends to continuemanufacturing operations in both Luxembourg and Coventry. There are expected to be good opportunities to improve the efficiency of thecurrent operations through integration with the existing facilities of the groupand the in house production of certain bought in products. There will be a non-recurring cost of around £2 million related to integratingthe Acquired Business into McBride, which is expected to be incurred in full inthe year ending 30 June 2007. Commenting on the acquisition, McBride's chief executive Miles Roberts said: "This acquisition provides an excellent base to considerably expand our positionin the growing machine dishwash product and discount retail sectors. It willmaterially strengthen our Western Continental Europe division and support ourgoal to be the preferred supplier to European retailers of private labelhousehold and personal care products. I am confident that this transaction willadd considerable value to McBride and our shareholders over the coming years. " For further information please contact: McBride plcMiles Roberts, Chief Executive 07748 180076Bob Beveridge, Finance Director 07876 593182 Financial Dynamics 020 7831 3113Andrew Dowler (1) Based on an assumed exchange rate of €1.50:£1. (2) Acquired Operating Profit represents the consolidated profitbefore interest and tax of the Acquired Business extracted from auditedfinancial information for the year ended 31 December 2006 excluding managementand other charges, other operating income and expenses, restructuring chargesand adjusted for the contractual structure applying following acquisition. (3) The statement regarding enhancement of earnings per share isbefore synergies, one-off costs associated with the acquisition and amortisationof acquired intangible assets. In addition, no statement in this announcement isintended to constitute a profit forecast for the financial years ending 30 June2007 or 30 June 2008 or any other period, nor should any statements beinterpreted to mean that earnings or earnings per share will necessarily begreater or lesser than those for the relevant preceding financial periods ofMcBride. Rather, these statements should be construed as references to potentialenhancements to the earnings that might otherwise have been earned during therelevant financial period. This information is provided by RNS The company news service from the London Stock Exchange