Industrial thread maker Coats Group announced its intention to raise £100m after markets closed on Wednesday, to fund the acquisition of German footwear materials producer Rhenoflex.
The FTSE 250 company said the funds would be raised through an accelerated bookbuild, launched immediately following its late afternoon announcement.
It confirmed it had signed a “definitive agreement” to acquire Rhenoflex for an enterprise value of €115m (£97.05m).
Following the recent acquisition of Texon, Coats said Rhenoflex represented a “synergistic bolt-on acquisition” and a “unique opportunity” to strengthen its position as a global leader in footwear components.
It described “significant” value creation potential through cost synergies through efficiencies in procurement and back-office of $6m, incremental to the $5m in synergies from Texon, with combined synergies of $11m resulting from the two acquisitions.
The purchase price represented 9.3x of last-12-months EBITDA to June, and 6.2x on a post-synergy basis.
“We are delighted to announce the acquisition of Rhenoflex, which presents an exciting and synergistic opportunity for Coats to establish a leading global platform in footwear components, expanding our presence in the fast-growing athleisure footwear market,” said chief executive officer Rajiv Sharma.
“Rhenoflex is a high quality business that is complementary to both Texon and Coats and its strategic focus on sustainability and innovation will significantly enhance our proposition to customers.”
Coats said Citi and Peel Hunt would jointly conduct a bookbuilding, with the number of new shares to be issued under the placing, and the placing price, to be determined at the close of the process.
Its directors had each agreed to participate in the placing, subscribing for shares worth more than £325,000 between them.
The company said it had also separately engaged Peel Hunt to undertake an intermediary offer of new shares at the placing price, alongside the placing, to existing retail investors through its ‘REX’ platform.
Coats Group shares closed down 0.6% on Wednesday at 66.5p, before the announcement.
Reporting by Josh White at Sharecast.com.
