Glasgow packaging group Macfarlane flexes muscle with multi-million English takeover

Macfarlane Group, the Glasgow-headquartered packaging provider with some 1,000 staff, has further boosted its headcount after sealing a multi-million-pound deal south of the Border.

The group has acquired A & G Holdings, owner of Gottlieb Packaging Materials, based in the north-west of England, for £3.55 million in cash. Gottlieb supplies protective packaging products to customers across a wide range of sectors from its warehouse facilities in Manchester. It has an experienced team of 15 employees, including two directors, all of whom will remain with the business following the takeover.

Bosses at Macfarlane said there were opportunities for Gottlieb’s customers to benefit from access to the group’s “extensive” range of protective packaging products and services. The maximum cash consideration of £3.55m includes an earn-out of up to £800,000 based on agreed profit growth targets over two years. A further adjustment is due for net assets in excess of £300,000 with the expected net assets on completion being £1m, including £800,000 of net cash. The deal is being financed entirely from Macfarlane’s existing £30m bank facility.

Chief executive Peter Atkinson said: “Gottlieb is a well-run, successful protective packaging distributor with an experienced management team. The acquisition of Gottlieb complements the recent opening of our new distribution facility in Heywood and further strengthens our ability to serve customers in the north-west of England. We look forward to working with the team at Gottlieb to support its continued growth.”

Analysts at house broker Shore Capital noted: “In our view, another good strategic acquisition for Macfarlane and showcasing continued momentum in acquisitions in line with its key ‘buy & build’ growth strategy. Gottlieb has an experienced team of 15 employees, including two directors who will remain with the business following the acquisition. We also note it complements the group’s new distribution facility in Heywood and further strengthens its ability to service its clients across the north-west. The group continues to retain a strong balance sheet with firepower to fund continuing organic and acquisitive growth.”

In February, Macfarlane said it was targeting fresh acquisitions and further growth after overcoming inflationary pressures to report a hike in annual sales, profits and dividend. New chairman Aleen Gulvanessian said that despite headwinds including rising operating costs and higher interest rates the group expected to deliver further growth in 2023.

Results for 2022 revealed that revenue from continuing operations rose 10 per cent to just over £290.4m. Profit before tax was up 7 per cent year on year to £19.9m while the board proposed a final dividend of 2.52p per share, amounting to a full-year pay-out of 3.42p, also an increase of 7 per cent.

Headquartered in Glasgow, Macfarlane employs more than 1,000 people at 37 sites, principally in the UK, as well as in Ireland, Germany and the Netherlands. It supplies some 20,000 customers, mainly in the UK and Europe, and operates via two divisions - packaging distribution and manufacturing operations. Atkinson said the firm, which this year marks its 50th anniversary on the London stock exchange, had a track record of completing two acquisitions a year, though that strategy had been put on hold during the pandemic.