Multix was acquired from AMP Investment Services, and Accantia Health & Beauty was acquired from Australia & New Zealand Banking Group.
Multix markets products in the household plastic bags, wraps and foil category in Australia and occupies the number two position in the category and the number one position in several key segments within the category. “Multix” is the company’s main brand and has a strong presence in all major supermarket outlets in Australia. Multix has been acquired for $70m, with $10m satisfied by the issue of 2,222,222 shares in McPherson’s Limited to AMP Capital Investors at $4.50 per share.
Accantia markets personal care products including cotton products (balls, tips and pads) and facial and baby wipes in Australia. The main brand is Swisspers which is the market leader in the Australian cotton segment. The products are sold through supermarkets and pharmacies and other retail outlets. Accantia has been acquired for $16m.
Both businesses have a sound financial track record and strong management teams. Combined annual sales revenue is around $75m per annum with earnings (before interest, tax and goodwill amortisation) budgeted at around $13m per annum.
David Allman, McPhersons managing director, says the two businesses meet McPhersons strict acquisition criteria. Each business has a strong market position, sources its products in a similar manner to McPhersons and distributes through retailers with whom McPhersons already has strong trading relationships.
The acquisitions are expected to be earnings per share positive this year and to provide volume and profit growth opportunities in subsequent years through the realisation of synergies with existing businesses.
Ray King, McPhersons chairman, says the acquisitions represented a continuation of the McPhersons strategy of investing in compatible businesses with strong market positions, low capital intensity and which meet return on investment objectives.
McPhersons debt to equity ratio would initially exceed 100 per cent but that, assisted by strong cash flow from McPhersons existing businesses as well as from the acquisitions, this is expected to be reduced to around 100 per cent by the end of this financial year. King says that it is the Board’s intention to maintain the Company’s current dividend policy.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at editorial@sprinter.com.au.
Sign up to the Sprinter newsletter
