Accrol Group Holdings plc (LON:ACRL), one of the UK’s leading independent tissue converters, has announced that the Group has completed the acquisition of John Dale Limited, a highly scalable flushable and biodegradable wet wipes business, for a total cash consideration of £3.9 million, funded from the Group’s existing cash reserves.
Acquisition rationale
The acquisition of John Dale is a strategic move into high growth products within the wet wipes segment of the tissue market, providing a well invested platform on which to build a sizeable business.
Highlights
· John Dale has a long-established and unrivalled reputation as a privately-owned manufacturer of high quality own branded and private label wet wipes and facial tissues for the UK retail market
· Accrol and John Dale share several customers, but John Dale also brings a number of significant new accounts into the Group
· The product range includes flushable and biodegradable moist toilet wipes, anti-bacterial and anti-viral wipes, facial cleansing wipes, baby and toddler wipes and feminine hygiene wipes
· The addition of incremental volume to the Accrol facial tissue business will serve to leverage the Group’s existing production facility in Blackburn
The business currently operates a single daily shift, five days a week, from its owned premises in Flint, North Wales, which is currently generating annualised revenue of c.£6.0 million and EBITDA (normalised) of c.£0.6 million.
Following acquisition, Accrol’s primary areas of focus will be the expansion of the anti-bacterial and anti-viral wet wipe ranges and optimisation of production facilities.
The acquisition includes the 47,000 sq.ft. property from which the business operates. Both the business and the property were purchased from John and Pauline Dale.
Dan Wright, Executive Chairman of Accrol, said:
“I am delighted to announce the purchase of the John Dale business in Wales. A move into the attractive wet wipes’ segment has been on our radar for some time; as a natural extension of our product range and wholly in line with our growth strategy across the household products category. It was essential, however, for us to find a business with a disruptive and environmentally friendly product which we could scale through organic investment. John Dale fits our criteria for growth – quality of product and market positioning, operating excellence in its asset base, and the optimisation of our distribution strengths. It gives Accrol a ready-made platform on which to build a sizeable wet wipes operation and presents an unmissable opportunity for us to compound shareholder value.”
Gareth Jenkins, CEO of Accrol added:
“John Dale is an excellent business, with three modern wet wipe machines, which are significantly under-utilised. The UK wet wipe market is valued at £0.5bn. We are confident that, with our wide customer base, market and operational know-how and a modest investment in additional machine assets, we can scale this business significantly, while generating strong margins, over the next two to three years. The slack within the property and working capital assets of the business will fund much of this growth and accelerate financial returns.”
