Proposed acquisition:Viterie Italia Centrale SrL.
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Trifast PLC
("Trifast", "TR" or the "Company")
Proposed €27 million acquisition of Viterie Italia Centrale Srl ("VIC")
will enhance Trifast's offering and European footprint
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· Class 1 acquisition of VIC, manufacturers and distributors of fastening systems (consideration: €27m; £22.5m) |
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· VIC is complementary to the Group's business model and significantly strengthens TR's presence in the domestic appliance market whilst also offering TR additional opportunities in existing electronic and automotive tier 1 markets |
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· Completion expected on 30 May 2014 subject to general meeting approval |
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· Funded from a new bank facility and minimal dilution arising from the allotment of consideration shares to the vendor |
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· A technological innovator, VIC is utilising its 'know-how' and customised approach in fastening applications gained from its leading position in the white goods industry and taking it into different markets, including automotive and electronics sectors |
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· VIC has grown rapidly through integration and diversification of its product since its formation in 1964 |
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· VIC offers tailor-made solutions and a highly efficient logistics service to a strong customer base |
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· Long-standing relationships and key customers encompass Europe's leading manufacturers of white goods, including Indesit, Whirlpool, Electrolux, Elica and BSH Bosch and Siemens |
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· VIC's operational management team will benefit from Trifast's global sales and marketing resources |
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· Acquisition will extend the Group's customer base as well as increasing TR's overall business with limited overlap |
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· Significant opportunity to grow the enlarged business consistent with Trifast's strategy and grow the combined businesses by selectively investing in new facilities, plant and machinery |
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· VIC will form a key additional part of Trifast's future expansion by providing an additional competitive manufacturing facility in Europe to complement the Group's existing resources in Asia |
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· Acquisition will be earnings enhancing, self-managing without the need for synergies |
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Malcolm Diamond MBE, Executive Chairman, Trifast plc "We have often said that we recognise as a management team that to achieve our aspirations and take TR to the next level for all stakeholders we must add both organic and strategic growth through new products, sectors and territories to our existing global offering and underpin the many opportunities apparent within our existing and growing multinational portfolio.
"This Italian-based acquisition represents an excellent strategic fit for Trifast; VIC operates as a manufacturer of highly engineered parts mainly to the domestic appliance industry plus early development into automotive lighting components; this capability will enable Trifast to offer a wider range of threaded fasteners manufactured within the Enlarged Group's facilities to these industry sectors, which we consider to be strategic for TR's global aspirations."
"VIC has a young, experienced and motivated management team, led by Carlo Perini. Their focus and continued improvement on customisation has allowed the business not only to keep up with output markets' technological development, but also to often act as an innovator, reinforcing its competitive positioning."
"As a Board, we believe that VIC offers an opportunity for growth not only within the European market, but also utilising our sales and marketing resource, to offer technical expertise in white goods components to manufacturers in Asia and the United States thus providing a strong strategic rationale matched by a compelling financial case."
"We look forward to providing further details with our Preliminary results next month."
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Enquiries: |
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Trifast plc |
TooleyStreet Communications Ltd |
Arden Partners plc |
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Malcolm Diamond MBE, Executive Chairman Jim Barker, Chief Executive Mark Belton, Group Finance Director Telephone: +44 (0) 1825 747366 Group website: www.trifast.com |
IR, Corporate & Media Relations Fiona Tooley Mobile: +44 (0) 7785 703523 Telephone: +44(0) 121 309 0099 Email: corporate enquiries@trifast.com |
Stockbrokers to the Company Adrian Trimmings Katelin Kennish Telephone: +44 (0) 20 7614 5900 |
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Market capitalisation: £100m |
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LSE Listing: Ticker: TRI FTSE index sector: FTSE Fledgling - Industrial Engineering |
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Trifast's trading business TR Fastenings is a leading international manufacturer and distributor of industrial fastenings to the assembly industries, with operations in Europe, the Americas and Asia. For more information, please visit www.trfastenings.com: LinkedIn: www.linkedin.com/company/tr-fastenings: Facebook: www.facebook.com/trfastenings: Twitter: www.twitter.com/trfastenings
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7 May 2014
Trifast PLC
("Trifast" or the "Company")
Proposed acquisition of VIC and notice of General Meeting
The Board of Trifast is pleased to announce that it has conditionally agreed to acquire the entire issued capital stock of Viterie Italia Centrale Srl ("VIC") for an aggregate consideration of €27 million (£22.5 million) (the "Acquisition") pursuant to the terms of an acquisition agreement dated 6 May 2014 (the "Acquisition Agreement").
The Acquisition constitutes a Class 1 transaction for the purposes of the Financial Conduct Authority's Listing Rules and as such, requires prior approval of the Company's shareholders ("Shareholders") at a general meeting of the Company ("General Meeting"), notice of which has been posted to Shareholders today together with a copy of the Class 1 circular.
About the Acquisition
The consideration for the Acquisition comprises €24.15 million (£20.12 million) payable in cash on completion of the Acquisition and €2.85 (£2.38 million) to be represented by the issue and allotment of 3,000,000 shares of 5 pence each in the Company (the "Consideration Shares"), subject to adjustment in the event that the agreed level of working capital is not left in VIC at completion. Under Italian law, the capital stock of VIC is represented solely by 'quotas' rather than shares, and Trifast will be purchasing the entire issued capital stock of VIC.
In addition, it has been agreed that a further payment may become due to the vendors of VIC (the "Vendors") depending on the performance of VIC over the twelve month period ending on 31 December 2014. If VIC generates a post-tax profit (as defined in the Acquisition Agreement) for the year ending 31 December 2014 which exceeds €3,000,000, then for each €1 above this sum an additional €5 is payable to the Vendors, subject to a maximum amount of €5,000,000. This sum is to be paid once the post-tax profit has been calculated in accordance with the Acquisition Agreement. Until such time as these additional monies have been paid in accordance with the Acquisition Agreement, any warranty or indemnity claims can be off-set (if proved or settled) against monies due to be paid, and if any claim is not settled or resolved an amount can be withheld from the monies paid until this matter is resolved.
The cash element of the consideration is to be funded from a new bank facility, further details of which are set out below.
Background to and reasons for the Acquisition
The Directors believe that the Acquisition will form a key additional part of Trifast's future expansion by providing an additional competitive manufacturing facility in Europe to complement the Group's existing resources in Asia.
The Directors also believe that the Acquisition represents an excellent strategic fit for Trifast as VIC operates as a manufacturer of highly engineered parts mainly to the domestic appliance industry (white goods) plus early development into automotive lighting components. This capability will enable Trifast to offer a wider range of threaded fasteners manufactured within the Enlarged Group's facilities to these industry sectors, which the Board consider to be strategic for its global aspirations for the business.
In addition, the Directors believe that VIC's operational management team will benefit from Trifast's global sales and marketing resources and will present opportunities beyond their current European customer base, whilst simultaneously allowing Trifast access to VIC's clients.
The acquisition of VIC will enable Trifast to increase the size of its overall business with limited overlap with the Group's existing business and is consistent with Trifast's strategy to grow by acquisition whilst capitalising on investment and organic growth opportunities. There is also a significant opportunity to grow the combined businesses by selectively investing in new facilities, plant and machinery.
The Directors expect the Acquisition to be earnings enhancing for the Group on a self managing and standalone basis without the need for any synergies. This statement does not constitute a profit forecast nor should it be interpreted to mean that the future earnings per Ordinary Share of the Group following completion of the Acquisition will necessarily match or exceed historical earnings per Ordinary Share.
The Directors believe that VIC offers an opportunity for growth not only within the European market, but also utilising the Group's sales and marketing resources, to offer technical expertise in white goods components to manufacturers in Asia and the United States thus providing a strong strategic rationale matched by a compelling financial case.
History of VIC
VIC was established in 1964 by the Perini family in Fabriano, central Italy and initially specialised in the design, production and distribution of customised self-tapping and thread-forming screws. Since then, it has grown rapidly through integration and diversification of its product range.
The original founder of the business wanted to retire in 2007 (being in his seventies), and to liquidate his quotas. In 2008 DGPA, an Italian private equity firm, acquired a 70 per cent. stake in the company from the founder, leaving 30 per cent. with the son of the founder (Carlo Perini) who is the current and ongoing Managing Director.
In accordance with its exit strategy, DGPA has decided to sell its entire interest in VIC, as has Carlo Perini. The Vendors believe that by joining part of a larger group in the same sector, VIC's successful business model could be rolled out further in Europe and into Asia and the United States. Trifast fulfils not only this strategic ambition, but has been known to Carlo Perini as offering a strong cultural fit - a key requirement for his future career aspirations within an enlarged group. For these reasons Trifast was specifically selected as a potential purchaser for VIC by Ernst & Young Financial - Business Advisors S.p.A., the selling agents.
Today, VIC predominantly manufactures and distributes fastening systems for the white goods industry. This market presents high entry barriers due to the strong loyalty of customers who require tailor-made solutions and a highly efficient logistics service.
With almost 50 years of activity, VIC has established long-standing relationships with its customers. VIC's key customers are the European leading manufacturers of white goods, including Indesit, Whirlpool, Electrolux, Elica and BSH Bosch and Siemens.
VIC's focus and continued efforts on customisation has allowed it not only to keep up with output markets' technological development, but also to often act as an innovator, reinforcing its competitive positioning.
Fastening solutions are specifically designed and engineered where applicable for each client to meet specific needs. VIC is currently able to use its 'know-how' and 'customised approach in fastening applications' among different sectors (automotive, electronics, etc.) reducing the dependence from the white goods industry and the risk profile of its business model.
VIC has a young, experienced and motivated management team, led by Carlo Perini who is known to and has been respected by Trifast's management team for several years. He will remain with the business as Managing Director of VIC.
Financial information on VIC
VIC had net assets and gross assets as at 31 December 2013 of €17.89 million and €31.88 million respectively. A summary of the trading results for VIC as extracted, without material adjustment, from the VIC historical financial information is set out below.
Investors should read the whole circular and should not just rely on the summary below:
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Year ended 31 December 2013 |
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Revenue |
27,069 |
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Gross profit |
7,904 |
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Profit before tax |
5,419 |
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Total assets |
31,876 |
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Net cash/(net debt) |
2,299 |
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Total equity |
17,888 |
Current trading and prospects of the Enlarged Group
The Trifast Directors maintain their belief as stated in the Group's trading update announcement of 15 April 2014 that the Company's audited financial results for the year ended 31 March 2014 "will exceed market expectations" as they were at the time, namely that underlying profit before tax for the Company's financial year to 31 March 2014 will be at least £8.6 million. The Directors confirm that these figures have been extracted from the Company's unaudited internal management accounts and are properly prepared on a basis of accounting consistent with the accounting policies adopted by the Company in the preparation of its audited financial statements for the financial year ended 31 March 2013. There have been no material changes or amendments to the accounting policies since 31 March 2013 and the same policies are expected to be adopted in the financial statements for the year ended 31 March 2014.
The Acquisition is complementary to the Group's business model and significantly strengthens its presence in the domestic appliance market. It also offers opportunities to the Group in existing electronic and automotive tier 1 markets. VIC continues to experience satisfactory trading conditions and the Board is excited about the prospects for the Enlarged Group.
The Board believes that the combination of VIC and the Company, with the cross-selling opportunities available, will enhance the prospects of the Enlarged Group.
This statement does not constitute a profit forecast nor should it be interpreted to mean that the future earnings per Ordinary Share of the Group following completion of the Acquisition will necessarily match or exceed historical earnings per Ordinary Share.
Details of the Bank Facility
Under the terms of a bank facility between HSBC and the Company dated on or about 6 May 2014 (the "Bank Facility"), HSBC has agreed to make available to the Company the banking facilities described below.
The Bank Facility comprises the following facilities:-
• a term loan facility of up to €25,000,000 ("Facility A"). This is to be used by the Company for funding the Acquisition; and
• a revolving credit facility of up to £10,000,000 ("Facility B").
The obligations of Trifast under Facility A and Facility B (the "Facilities") are guaranteed by the UK non-dormant subsidiaries of the Company.
Facility A is repayable in semi-annual instalments of €1,250,000 on 31 October 2014, 30 April 2015, 31 October 2015, 30 April 2016 and 31 October 2016; then at the rate of €2,500,000 payable on 30 April 2017, 31 October 2017, 30 April 2018 and 31 October 2018, with the final balance being payable on the date 5 years after date of the facility.
Interest on the Facilities is charged at the aggregate rate of LIBOR/EURIBOR plus a margin (initially 2.40 per cent.), ratcheted from six months after drawdown in accordance with a formula incorporating the ratio of consolidated net debt of the Enlarged Group against the consolidated EBITDA of the Enlarged Group.
The Facilities are to be secured by way of a charge over Trifast's premises at Uckfield; a first fixed and floating charge over all other UK assets of the Enlarged Group; a share charge over TR Asia Investment Holdings Pte Ltd (Singapore); and a quota charge over VIC.
Notice of General Meeting
Notice has today been sent with the Class 1 Circular to Shareholders convening a General Meeting of the Company to be held at 10a.m. on 30 May 2014 to consider and, if thought fit, pass an ordinary resolution to approve the Acquisition.
The Listing Rules require that the Acquisition (being a Class 1 transaction for the purposes of the Listing Rules) be approved by the members of the Company in general meeting and this is the reason for the Resolution.
The Company intends to allot the Consideration Shares using the authority given to them by the Shareholders pursuant to resolution 10 of the business passed by the Company at its Annual General Meeting on 17 September 2013, whereby the Company was authorised to allot shares with a par value of up to £1,807,647 pursuant to section 551 of the Companies Act 2006.
The above documentation and information relating to the voting rights of shareholders will be available to view on the Company's website, www.trifast.com. In addition, the documents will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.Morningstar.co.uk/uk/NSM.
Expected Timetable
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Latest time and date for receipt of Forms of Proxy for the General Meeting |
10 a.m. on 28 May |
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General Meeting |
10 a.m. on 30 May |
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Expected date for completion of the Acquisition |
30 May |
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Admission of Consideration Shares to the Official List and to trading on the premium listing segment of the Main Market of the London Stock Exchange |
2 June |
Advisers to the Company
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Sponsor: |
Arden Partners plc
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25 Old Broad Street London EC2N 1AR
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Reporting accountant:
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KPMG LLP Chartered Accountants regulated by ICAEW
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15 Canada Square London E14 5GL
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UK Solicitors:
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Charles Russell LLP
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Compass House Lypiatt Road Cheltenham Gloucestershire GL50 2QJ
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Italian Solicitors: |
Ughi e Nunziante |
Via Visconti di Modrone, 11 20122 Milano Italia |
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Registrar:
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Computershare Investor Services PLC
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The Pavilions Bridgwater Road Bristol BS13 8AE
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Advisers to Vendors |
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Financial Adviser: |
EY |
Via Wittgens, 6 20123 Milano Italia |
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Legal Adviser: |
Gattai, Minoli & Partners
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Via Manzoni, 30 - 20121 Milano Italia |
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This information is provided by RNS
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