Glasgow packaging group Macfarlane acquires English peer in multi-million-pound swoop
The firm, which last week reported resilient full-year results, has taken over GWP Holdings, the owner of GWP Group, a protective packaging manufacturing and distribution business based in Wiltshire.
The Scots firm is paying a maximum cash consideration of £15.1 million, including an earn-out of £5.1m based on agreed profit growth targets over two years, and a further adjustment for net assets in excess of £1.6m .
Macfarlane is financing the deal through its recently extended £30m bank facility.
For the year to the end of September 2020, GWP generated sales of £13.2m and reported a pre-tax profit of £1.6m.
GWP supplies customers across the UK but mainly within the south west of England from its manufacturing facilities in Salisbury and Swindon.
Macfarlane, which last week flagged fresh acquisitions, said there were “significant opportunities” for both firms to benefit from access to their respective ranges of protective packaging products and services.
GWP has a team of 107 employees, including six directors. Five of those directors will remain with the company following the acquisition.
Peter Atkinson, chief executive of Macfarlane, said: “GWP is a profitable, growing, well invested company with an experienced management team that is fully committed to the business going forward.
“The acquisition will be funded using bank debt and will be earnings enhancing. We look forward to working with the team at GWP to support its continued growth and develop opportunities for us to work together to provide all our customers with a broader portfolio of value-add and sustainable protective packaging solutions.”
Analysts at house brokerage Shore Capital noted: “No sooner have we published numbers on this high quality business, which reported excellent [full-year] 2020 results on February 25, and we are pushing through an upgrade to our forecasts on a strategic acquisition.
“We see material upside potential for investors as Macfarlane’s strengths and its qualities become increasingly recognised – with growth potential leveraging this.”
Last week, Macfarlane said it was well placed to benefit when the UK economy begins to recover after booking a “resilient” full-year performance, sending its shares sharply higher.
During 2020, sales from existing customers benefited from underlying strength in the e-commerce, household essentials and medical sectors as a result of the pandemic, the firm noted.
This was partially offset by weaker demand from those sectors most affected by Covid-19 – automotive, aerospace, high street retail and hospitality.
Sales at the group’s core packaging distribution business lifted 2.6 per cent, year-on-year, to £201.7m, as part of overall turnover of £230m, marking a rise of 2.1 per cent. Profit before tax rose 9.6 per cent to £13m.
Headquartered in Glasgow Macfarlane employs more than 850 people at 31 sites, principally in the UK, but also in Ireland, Sweden and Holland. That headcount is down by about 60 as a result of restructuring actions.
Sales have also benefited from the 2019 acquisitions of Ecopac and Leyland Packaging, as well as the January 2020 takeover of Armagrip.
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