Acquisition

RNS Number : 9670V

Johnson Service Group PLC

23 January 2012

 



23 January 2012

Conditional exchange of contracts for Textile Rental business of Cannon Textile Care

Johnsons Apparelmaster Limited ("JAM"), the Textile Rental division of Johnson Service Group PLC ("JSG"), has exchanged contracts relating to the acquisition of the business and specified garment, linen, mat and towel contracts and related assets of Cannon Textile Care ("Cannon") from OCS Group UK Limited ("OCS") for a net consideration of approximately £6.1 million. Cannon currently operates its textile rental business from laundries based in Glasgow, Manchester, Bristol, Newmarket and Balham with additional depots in Gateshead and Birmingham. OCS will continue to operate their washroom services business under the Cannon Hygiene brand.

The acquisition is conditional on a number of points including clearance from the Office of Fair Trading. There is also a right of rescission by either party if there is a material adverse change in the business prior to completion or if regulatory clearance has not been received by 29 May 2012.  It is currently anticipated that the transaction will be completed at the end of March 2012.  

The net consideration for the business and assets will be approximately £6.1 million based on estimated contracted annual revenue of £15.0 million at the time of exchange of contracts. The consideration will be adjusted, up or down, to reflect the actual contracted revenue at the date of completion, although this is not expected to change significantly. The consideration will be payable in cash at completion and funded from the existing debt facility.

The revenue and operating profit relating to the business and assets to be acquired as included in the accounts for OCS for the year ended 31 March 2011 were £16.5 million and £0.2 million respectively.

On completion, JAM will operate the existing Cannon Laundries whilst reviewing the combined business structure.  It is anticipated that any expected operational efficiencies  and economies of scale from the business going forward will take some time to be fully realised, and accordingly, the transaction is not expected to have an impact on adjusted operating profit (before intangibles amortisation and exceptional items) for the year ending December 2012 but is expected to be accretive thereafter. The estimated costs of integrating the businesses are approximately £1.7 million, which will be treated as an exceptional item in 2012.

The contracts to be acquired are complementary to those currently serviced by JAM and will enable the combined business to deliver enhanced customer value whilst at the same time securing both future opportunities in our core markets and economies of scale.

John Talbot, Chairman said "We are delighted to have exchanged contracts on this acquisition.  It will allow Johnsons Apparelmaster to improve its service to customers through an expanded geographical coverage".

Enquiries:

Johnson Service Group PLC
John Talbot, Executive Chairman	Yvonne Monaghan, Finance Director
Tel:  [phone]	Tel:   [phone]
Investec Investment Banking  (NOMAD)
David Flin James Grace Cara Griffiths
Tel:  [phone]

Newgate Threadneedle

Graham Herring

John Coles

Tel:       [phone]

 

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