The 海角视频's leading independent soft tissue converter has acquired a Leicester-based firm for almost £42m.
Blackburn-based Accrol Group announced the acquisition of Leicester Tissue Company (LTC) on Tuesday, along with the news it has conditionally raised another £38.5m through share placing.
A family-run East Midlands business led by Amin Tejani, the Thurmaston tissue manufacturer supplies to more than 27 countries, and specialises in paper making and converting paper reels into a variety of tissue-based products. It was founded in 2014 and supplies 海角视频 customers including major supermarkets and value retailers.
Accrol, which claims to supply the best value toilet roll, kitchen towel and facial tissue to the 海角视频 market, said the deal is worth an initial consideration of £35m, with up to a further £6.8m of deferred consideration due next year, "contingent on certain performance criteria being achieved".
Dan Wright, executive chairman of Accrol, said he was "delighted" to announce the news.
He added: "We have been very selective about Accrol's first acquisition, and LTC's scale and quality demonstrates the ambitions we have for the group.
"Accrol has a highly experienced senior management team with proven and relevant M&A integration skills, which is committed to building a world-class, operationally efficient business of size and scale and delivering substantial shareholder returns through organic and acquisitive growth.
"With around £25m having been invested in the LTC business since its foundation in 2014, it is equipped with top quality machines and has highly capable day-to-day operational leadership, on which we can build. I look forward to welcoming the LTC team to the group and to an exciting future for our combined business."
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The Manchester office of Addleshaw Goddard said it advised AIM-listed Accrol on the acquisition, with the 55-person team led by partner Roger Hart.
Gareth Jenkins, CEO of Accrol, added: "This is a step change for Accrol. LTC adds significant capacity to our existing business, which is already growing ahead of the market, as well as immediately enhancing the earnings of the Group. In addition to bringing a wider customer base, it increases the size and scale of the business, enabling greater cost efficiencies and improved market positioning.
"The group's cash flow will also benefit from the Acquisition, not least because we are able to defer a £5 million investment in a new line, planned for Q4 FY21, and also because of the cash generative nature of LTC."