Acquisition of USA Distributor
3 August 2018
Warpaint London plc
("Warpaint London" or the "Company")
Acquisition of USA Distributor
Warpaint London plc (AIM: W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, is pleased to announce the acquisition of the Company's USA distributor, Marvin Leeds Marketing Services Inc ("Leeds Marketing") (the "Acquisition").
Leeds Marketing, based in New York, currently derives approximately two thirds of its revenue through the distribution of the Company's W7 products, with the remainder being through the sale of other branded cosmetics. Leeds Marketing was the Company's exclusive distributor in the USA until January 2018 and sells the Company's products to major 'off-price' retail groups in the USA and Canada, including the TJX Companies (trading under their US brands TJ Maxx and Marshalls, and Canadian brand Winners) and Bealls Outlet Stores. Recently Leeds Marketing has opened new accounts for W7 and other Warpaint brands with a number of retailers in the USA, including Century 21 (12 stores), Forever 21 (506 stores) and Macys Backstage (72 stores).
The USA is the world's largest colour cosmetics market by value and the Company believes the Acquisition will allow it to have greater control over its North American sales activities, enabling it to achieve its declared strategy of international expansion, particularly in the United States. In addition, the Acquisition is expected to open up further opportunities to expand sales in Central and South America, where customers prefer to be served by a USA-based entity.
In the year to 31 December 2017 Leeds Marketing had revenue of US$5.9 million and profit before tax (adjusted for non-recurring costs after completion of the Acquisition) of approximately US$0.4 million. Net Assets, adjusted for a capital reorganisation on completion of the Acquisition, as at 31 December 2017 were US$1.1 million.
Under the terms of the Acquisition the consideration will comprise US$2.16 million in cash, subject to an adjustment depending on the net assets acquired which are expected to be US$0.8 million. The Company has paid US$2 million in cash with two further payments of US$80,000 due on 30 September 2018 and 31 December 2018, subject to the net asset adjustment.
Commenting, Sam Bazini and Eoin Macleod, Joint Chief Executives of Warpaint, said:
"We see the acquisition of Leeds Marketing as a further important milestone in our growth story. Since admission to AIM, we have focused on international expansion and the USA is central to that strategy. The Acquisition will allow Warpaint and its brands direct access to some of our key existing customers, as well as opening up a number of new opportunities in the USA and the Americas more widely.
"We look forward to integrating the Leeds Marketing staff into the existing Warpaint team and continuing to expand the routes to market for our products."
Enquiries:
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Warpaint London PLC Sam Bazini - Joint Chief Executive Officer Eoin Macleod - Joint Chief Executive Officer Neil Rodol - Chief Financial Officer
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c/o IFC
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Stockdale Securities Limited (Nominated Adviser and Broker) Antonio Bossi, Ed Thomas - Corporate Finance Fiona Conroy - Corporate Broking
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020 7601 6100
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IFC Advisory Limited (Financial PR & IR) Tim Metcalfe Heather Armstrong Florence Chandler |
020 3934 6630
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Warpaint London plc
Warpaint London is a colour cosmetics business, based in Iver, Buckinghamshire. It is made up of two divisions: close-out and own-brand. The second and larger own-brand division primarily consists of the Group's flagship brand, W7, together with the Technic, Body Collection and Man'stuff brands acquired through the acquisition of Retra Holdings in 2017.
W7 is an extremely creative, design-focused cosmetic brand proposition with a focus on the 16-30 age range, delivering high-quality cosmetics at affordable prices. The W7 brand has grown organically since its inception in 2002 and now contains over 700 items which are sold into high street retailers and independent beauty shops across the UK, Europe, Australia and the US. In 2017, W7 was supplied in more than 60 countries.
In 2017 Warpaint completed the acquisition of Retra Holdings Limited, a UK colour cosmetics business with a significant focus on the gifting market, principally for high street retailers and supermarkets including Boots, Superdrug and Asda. Retra owns three major brands: Technic, Body Collection and Man'stuff, in addition to supplying white label cosmetics produced for several major high street retailers including Asda and Matalan.
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