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Epwin Group PLC on Monday said it has bought Poly-Pure Ltd for an initial consideration of £15 million, on a debt-free, cash-free basis.
Epwin expects the transaction to be ‘immediately earnings enhancing’.
Poly-Pure is a Norwich-based company, which supplies re-processed polyvinyl chloride, or PVC.
Solihull, England-based building products manufacturer Epwin said the acquisition has been funded from the company's existing resources.
The initial cash consideration of £15 million represents a multiple of six times estimated adjusted earnings before interest, tax, depreciation and amortisation for 2022, it added.
Further deferred consideration may become payable, subject to an earn out mechanism, in equal instalments. This is based upon the adjusted Ebitda of Poly-Pure in the three calendar years to December 2025 and is capped in total to a further £15 million in cash.
In its financial year to July 31, 2022, Poly-Pure expects to report revenue of around £10 million, up from £4.7 million in financial year 2021. It also expects pretax profit to be £2.4 million.
Epwin said that acquisition is ‘a strong strategic fit’ to the group.
It explained that it has a ‘diverse and growing customer base and with a programme to expand its processing capacity’, as there is an increasing industry focus on improving the use of reprocessed materials in manufacturing.
It also said that the acquisition accelerates its plans to integrate a greater proportion of recycled materials into its products. Poly-Pure will also provide Epwin with a more cost-effect supply of recycled PVC, it added.
Epwin expects the acquisition to be margin accretive at the adjusted Ebitda level, as well as immediately earnings enhancing.
Chief Executive Jon Bednall said: ‘We see good opportunities to derive synergistic benefits with our existing operations, increase the proportion of recycled material used in our products and further improve the already strong environmental credentials of the group's products. The acquisition also furthers our strategy of broadening our materials capabilities for the future.’
Shares in Epwin were up 0.3% to 73.22 pence each in London on Monday morning.
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