Topps Tiles buys controlling stake in trade brand Pro Tiler
Topps Tiles announced the acquisition of 60% of online tile trade supplier Pro Tiler on Thursday, for initial consideration of £5.3m.
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The London-listed firm said it had also agreed put-and-call options on the remaining 40% of Pro Tiler, exercisable from March 2024.
Consideration of £5.3m, plus a £0.3m closing adjustment, was paid in cash on completion.
Topps Tiles said it intended to acquire the remaining 40% from March 2024, based on an agreed multiple of profits for the 12 months preceding that.
Consideration for the initial acquisition was financed from the group's existing cash balances.
The company described the acquisition of Pro Tiler as a “significant development” in its growth strategy, and an “important first step” into operating a specialist online business alongside its omni-channel retail and commercial brands.
It said it was expecting the acquisition to be accretive to adjusted earnings in the current financial year, and beyond.
Looking at its current performance, Topps Tiles said retail trading in the second quarter to date had progressed well, with sales for the first nine weeks growing by 18.2% on a two-year like-for-like basis, and 45.6% year-on-year, against a period of lockdowns and trading restrictions in 2021.
Retail gross margins had also improved following management actions on pricing, with the company saying its costs were “well controlled” despite significant inflation, and operating cash flows in line with expectations.
The group said it was confident of delivering adjusted profit before tax in line with expectations for the year as a whole.
Its commercial business, meanwhile, had delivered “encouraging” sales growth, with a “strong” order book.
Topps Tiles said it was confident it would deliver an improved performance in the commercial business this year.
“Pro Tiler is a well-respected brand with a strong customer service ethic, which fits closely with our core values,” said Topps Tiles chief executive officer Rob Parker.
“The acquisition of an online specialist supplier to trade customers complements our omni-channel retail business and commercial brands.
“It also moves us closer to our 20% market share goal by 2025, while maintaining our specialism of tiling and related products.”
Parker said the development of its digital offer remained an important area of focus for Topps Tiles, with plans to expand that further in 2022.
“Trading for the year to date is in line with our plan and we are confident of delivering performance in line with our expectations.”
Topps Tiles said it would announce its interim results for the 26 weeks ending 2 April on 24 May.
At 0825 GMT, shares in Topps Tiles were down 1.36% at 56.72p.