Acquisition of Texon

RNS Number : 4342R
Coats Group PLC
06 July 2022
 

6 July 2022

Coats Group plc

Acquisition of Texon - a leading footwear solutions provider

Transaction building on Coats' existing presence in the highly attractive Athleisure Footwear market

 

Coats Group plc ('Coats' or the 'Group'), the world's leading industrial thread manufacturer, is pleased to announce it has signed a definitive agreement to acquire 100% of Texon International Group Limited  ('Texon'), a leading footwear solutions provider, for an enterprise value of $237 million.

Texon, a company with operations in Asia and Europe, supplies high quality structural components to the global footwear market. The business is one of the market leaders in innovation and supplies high-performance sustainable materials, including heel counters, toe puffs and insoles to the highly attractive premium athleisure footwear market. Texon is a complementary addition to Coats' existing footwear business with attractive commercial opportunities by leveraging Coats' existing footprint. Texon has a long heritage as a leading supplier to the world's leading brands and is anticipated to deliver attractive high single digit growth in a fragmented market.

Texon is focused on sustainability, targeting zero-waste by 2025 with its broad suite of sustainable product offerings supporting customers to fulfil their own ambitions in sustainability, which will enable Texon to further strengthen its existing presence amongst leading global footwear brands.

Under the terms of the transaction, Coats has agreed to pay an Enterprise Value of $237 million, and a total net cash consideration of $211 million after deducting assumed retirement liabilities and other customary adjustments. The acquisition is expected to be earnings accretive in year 1 and will be funded initially through a bridge financing facility with net leverage to remain within the Group's stated target of 1.0x to 2.0x. The acquisition is expected to generate annual synergies of approximately $5 million by the end of the second full year of ownership through efficiencies in commercial, procurement, marketing, distribution and production.

Rajiv Sharma, Coats Group Chief Executive, said:

"The acquisition of Texon will strengthen our existing presence in the highly attractive athleisure footwear market. The business is complementary to Coats and provides attractive future commercial opportunities as we work together leveraging our combined expertise and knowledge to succeed with our customers. We recognise and share Texon's focus on sustainability and innovation and believe that this acquisition strengthens our ability to fulfil these shared ambitions."

The acquisition is expected to complete in July.

For the year ended 31 December 2021, Texon generated revenue of $132 million, EBITDA of $21 million 1 and adjusted operating profit of $17 million. Gross assets subject to the transaction are $150 million. June LTM is on track to deliver revenue of $145 million.

Lazard acted as financial adviser to Coats on the transaction.

A presentation for analysts and investors will be held at 8.30am GMT today, available via:

https://www.investis-live.com/coats/62c2e14a478a650e00398e36/gwewa

This announcement contains inside information for the purposes of the Market Abuse Regulation. 

1 Including the impact of IFRS16

 

 

Enquiry details

 

 

 

 

Investors

Nick Kidd

Coats Group plc

+44 (0)20 8210 5090

Media

Richard Mountain / Nick Hasell

FTI Consulting

+44 (0)20 3727 1374

 

 

About Coats Group plc

Coats is the world's leading industrial thread company. At home in some 50 countries, Coats has a workforce of over 17,000 people across six continents. Revenues in 2021 were US$1.5bn. Coats provides complementary and value-adding products, services and software solutions to the apparel and footwear industries. It also applies innovative techniques to develop high technology performance materials threads, yarns, fabrics, and composites in areas like personal protection, telecoms, energy, transportation, and household and recreation. Headquartered in the UK, Coats is a constituent of the FTSE 250 and FTSE4Good Index Series. It is a participant in the UN Global Compact, a member of the Ellen MacArthur Foundation, has approved short term Science Based Targets to 2030 and is committed to developing a long-term target to reach net-zero emissions by 2050, the highest level of ambition on climate change under the Science Based Target initiative. The pioneering history and innovative culture of Coats enable the delivery of its purpose to connect talent, textiles, and technology to make a better and more sustainable world.

About Texon

Texon is a leading manufacturer of high performance, sustainable materials for footwear, accessories, and functional apparel. With a proud heritage dating back more than 75 years, Texon's broad product portfolio includes innovative structural components, revolutionary woven materials, creative cellulose solutions and high-performance fabrics. Trusted by the world's best-known brands for its technical know-how and unwavering commitment to the environment, Texon is a global business, with a local way of working and teams in more than 90 countries. Always striving for better, Texon's ambition is zero waste by 2025. This goal drives the business to make a sustainable difference - creating high quality products that have a positive impact on the planet, communities, and the future.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
ACQKELFBLDLBBBE

Companies

Coats Group (COA)
UK 100

Latest directors dealings