Northern Bear Plc Acquisition of H Peel & Sons (0222M)

TIDMNTBR

RNS Number : 0222M

Northern Bear Plc

25 July 2017

25 July 2017

Northern Bear PLC

("Northern Bear" or the "Group")

Acquisition of H Peel & Sons

Northern Bear is pleased to announce the acquisition of 100 per cent. of the share capital of H Peel & Sons (Holdings) Limited, including its wholly owned subsidiary H Peel & Sons Limited (together, "H Peel") (the "Acquisition").

H Peel is an interiors and fit-out business based in Dewsbury, West Yorkshire. It has a blue chip client base across the UK and operates primarily in the hotel and leisure sectors. As with other existing Group companies, H Peel is well established in its sector, consistently profitable and cash generative. The management team at H Peel have been with the company for many years and have committed to remain with the business for at least three years post completion of the Acquisition. The transaction meets all of our acquisition criteria and we see it as an excellent fit for the Group, providing further sectoral and geographical diversification.

The purchase consideration, payable to Charon LLP and the management of H Peel (the "Vendors"), will be a maximum of approximately GBP2.9m in aggregate (the "Consideration"). The Consideration will take the form of approximately GBP0.7m cash payable immediately (the "Cash Consideration"), GBP0.4m deferred cash consideration due in four equal 6-monthly instalments commencing 6 months from completion of the Acquisition, 461,538 ordinary shares in Northern Bear (valued at approximately GBP0.4m based on the closing mid-market price of the Group's ordinary shares on 24 July 2017, being 82p) (the "Consideration Shares") and a maximum of GBP1.4m of contingent cash consideration payable under various earnout agreements.

H Peel generated turnover of GBP5.4m, reported profit before taxation of GBP0.4m and adjusted* profit before taxation of GBP0.5m in the year ended 31 August 2016 (unaudited). In the three years ended 31 August 2016, the average reported profit before taxation was GBP0.6m (unaudited) and average adjusted* profit before taxation was GBP0.7m (unaudited).

The acquisition is expected to be earnings enhancing for Northern Bear in the coming year to 31 March 2018 and it is anticipated that all future earnout and deferred consideration payments will be met through cash generated by H Peel. The Cash Consideration will be met from the Group's existing revolving bank facilities.

H Peel has been acquired on a debt-free cash free basis after adjustment for normalised working capital, on which basis the net asset position for the group being acquired is approximately nil. H Peel & Sons Limited, the trading company of H Peel, was subject to a management buyout in June 2014 effected through H Peel & Sons (Holdings) Limited. As at 31 May 2014, H Peel and Sons Limited had retained reserves of approximately GBP2.4m. The Consideration Shares are subject to a lock in and orderly market arrangement pursuant to which the Vendors have undertaken that they will not dispose of any interest in the Consideration Shares for a period of 12 months from the date of admission to trading on AIM of the Consideration Shares and, for the 12 months following that period, that they will only dispose of their holdings with the consent of Strand Hanson.

* adjusted profits are after stated after adding back one-off and non-recurring items, principally transaction and investor related costs.

Steve Roberts, Executive Chairman of Northern Bear, commented:

"I am delighted to announce our first acquisition for almost ten years. We have looked at a number of acquisition opportunities in recent years and H Peel was the first one that met all of our criteria. We have acquired a well-established, consistently profitable and cash generative business with a strong management team in place who are committed to remaining with the business. I would like to welcome all of H Peel's employees to our Group and look forward to working with them. "

Application will be made for 461,538 Consideration Shares to be admitted to trading on AIM on 1 August 2017. Following the issue of the Consideration Shares, the Company's issued share capital will consist of 18,406,722 ordinary shares with voting rights; in addition, the Company holds 474,540 ordinary shares in treasury.

The aforementioned figure of 18,406,722 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Northern Bear under the Financial Conduct Authority's Disclosure and Transparency Rules.

For further information contact:

 
 
 Northern Bear PLC                     +44 (0) 166 
  Steve Roberts - Executive               182 0369 
  Chairman                             +44 (0) 166 
  Tom Hayes - Finance Director            182 0369 
 Strand Hanson Limited (Nominated 
  Adviser and Broker) 
  James Harris 
  James Spinney                         +44 (0) 20 
  James Bellman                          7409 3494 
 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

This information is provided by RNS

The company news service from the London Stock Exchange

END

ACQBELFLDDFFBBZ

(END) Dow Jones Newswires

July 25, 2017 06:30 ET (10:30 GMT)