Filta Group to buy Essex-based Watbio for GBP6.9m
Filta Group has entered into a conditional agreement to buy Essex-based Watbio, which provides grease and drain management solutions to commercials kitchens, for £6.9m.
The consideration, which is subject to adjustments for working capital movements of up to £1.2m, will be payable in two principal tranches followed by a final payment to take account of any increase in the working capital between 30 September 2018 and the date of completion.
The cash element of the consideration is being satisfied from the proceeds of an issue of new ordinary shares to raise £3m, a new £4m five-year term loan facility and the group's existing bank and cash in hand.
Filta said it has completed a conditional placing with new and existing institutional investors to raise the £3m through the issuance of 1.5m new ordinary shares at 200p each, which is an 8.1% premium to the closing price on Tuesday.
The AIM-listed provider of fryer management and other services to commercial kitchens, said the deal delivers a high-margin, repeat-revenue business, with scope for significant margin improvement. It will also create the leading national provider of grease management and drainage services in the UK.
Filta said it is targeting annual operational synergies in the order of £0.9m once fully implemented and expects the acquisition to be earnings-enhancing in the first full year of ownership.
Watbio operates from its head office in Maldon, Essex, and a further 10 regional office and warehouse locations, including Glasgow, Newcastle, Manchester, Birmingham, London and Plymouth and Stratford-upon-Avon. The company's audited accounts for the year to 30 September 2018 reflect adjusted earnings before interest, tax, depreciation and amortisation of £1.13m and pre-tax profit of £0.8m, on revenues of £10.3m.
Filta also provided a very brief update, saying trading remains in line with management expectations, with all of fryer management, FiltaSeal and FiltaGMG revenues continuing to grow. In addition, there is a strong pipeline of potential franchisees expected to be signed in the current year or in the first quarter of 2019.
At 1430 GMT, the shares were up 10.2% to 203.88p.