TIDMKETL
RNS Number : 7981B
Strix Group PLC
05 October 2022
The information contained within this announcement is deemed to
constitute inside information for the purposes of article 7 of the
Market Abuse Regulation (EU) no. 596/2014. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
5 October 2022
Strix Group plc
("Strix", the "Company" or the "Group")
Conditional acquisition of Billi for c.GBP38 million
Strix Group Plc (AIM: KETL), the AIM quoted global leader in the
design, manufacture and supply of kettle safety controls and other
complementary water temperature management components, is pleased
to announce that it has entered into conditional agreements to
acquire the entire issued share capitals of each of (i) Billi
Australia Pty Ltd ("Billi Australia") and Billi New Zealand Ltd
("Billi NZ") and (ii) Billi UK Ltd ("Billi UK", together with Billi
Australia and Billi NZ, "Billi") (the "Acquisition"), for an
aggregate cash consideration of approximately GBP38m, payable on
completion, on a debt and cash free basis, subject to customary
closing adjustments.
The consideration for the Acquisition will be funded through a
new term loan and Strix is undertaking an equity placing to
maintain an appropriate level of leverage post the Acquisition. The
placing is being conducted through an accelerated bookbuilding
process which will be launched immediately following release of
this announcement.
Highlights
-- c.GBP38 million acquisition of Billi, a leading Australian
brand supplying premium filtered and non-filtered instant boiling,
chilled and sparkling water systems
-- Expecting net debt as at 31 December 2022 to be approximately
1.9x Strix's 2022 pro forma adjusted EBITDA, with strong
deleveraging thereafter to c.1.4x by end of 2023
-- In the 12 months ending 31 December 2022, Billi is expected
to generate revenue of c.GBP43.7m and adjusted EBITDA of
c.GBP10.2m
-- Billi has a successful history of growth, with double digit
revenue CAGR over the past 5 years and is highly cash generative,
delivering cash conversion of c.88%
-- The Acquisition materially accelerates the trajectory of and
is accretive to Strix's medium term targets with these targets now
expected to be reached ahead of the initial 2025 timeframe
Strategic rationale
-- Materially changes the earnings profile of the Group,
accelerating growth plans for the Water & Appliance categories
and supporting the Group's medium term ambition
-- The Board expects the Acquisition to be mid single digit
earnings accretive in the first full year of ownership and c.10%
accretive in the second, in advance of any synergies(1)
-- Billi is benefitting from structural market and ESG tailwinds
including increasing focus on water filtration, a reduction in
single use plastics and a focus on energy consumption from heating
water which is aligned with Strix's sustainability goals
-- Adds well developed and premium products in the high growth
and strategically important hot tap market and increases Strix's
position and portfolio of water dispenser systems
-- The Board expects Strix's existing technology and expertise
can be used to enhance Billi's NPD roadmap
-- Opportunity for further organic growth driven by increased
residential sales, new product development particularly in
sparkling, internationalising Billi's revenue stream through
Strix's global footprint, cross selling Strix products into
commercial applications and growing aftermarket sales
-- Identified efficiencies across Billi's product lifecycle
through utilising Strix's Chinese operation to improve procurement,
using Strix filters in Billi products, consolidating the marketing
group and rationalising the store estate
Details of the Acquisition and Financial Information on
Billi
-- Conditional acquisition of Billi Australia by Strix Australia
Pty Ltd ("Strix Australia") and Billi NZ by Strix (U.K.) Limited
("Strix UK") on a debt free, cash free basis, subject to customary
closing adjustments. Strix Australia and Strix UK are entities
ultimately owned by Strix
-- Conditional acquisition of Billi UK by Strix UK for a fixed cash consideration
-- The aggregate consideration for Billi Austrialia, Billi NZ
and Billi UK is approximately GBP38m (AUD $65m) and is due in full
in cash on completion
-- The Acquisition is conditional upon: (a) completion of the
Waterlogic / Culligan merger; and (b) approvals of the Australian
Competition and Consumer Commission, the UK Competition and Markets
Authority and the New Zealand Commerce Commission
-- The agreements entered into in respect of the Acquisition
contain certain warranties and indemnities given by each of the
parties, which are customary for a transaction of this nature
-- The parties intend to put in place certain transitional
services provisions for an agreed period post completion of the
Acquisition
-- Key management of Billi will remain in place and participate
in the Strix Group Long Term Incentive Plan
-- In the 12 months ended 31 December 2021, on a consolidated
basis, Billi Australia and Billi NZ generated adjusted revenue of
c.GBP33.1m and adjusted EBITDA of c.GBP6.9m. During this period
Billi UK was part of Waterlogic Group ("Waterlogic") and did not
report its financials separately
-- In the 12 months ending 31 December 2022, Billi, including
Billi UK, is expected to generate revenue of c.GBP43.7m and EBITDA
of c.GBP10.2m
-- Acquiring Billi from Culligan International after the
completion of its combination with Waterlogic; the divestment of
Billi is a condition to completion of the Waterlogic / Culligan
merger announced in December 2021, with timetable dictated by that
process
-- Completion of the Acquisition is expected before year end, subject to regulatory approvals
Debt Refinance
In conjunction with the Acquisition, the Group announces a debt
refinancing with new facilities consisting of:
-- A refinance of the current GBP80 million revolving credit
facility with a new tenor of 3 years plus two 1 year extension
options; and
-- A new GBP49 million amortising term loan with a tenor of 3 years.
The interest rate on both facilities is calculated as the sum of
the margin (made by reference to a sliding scale dependent on net
leverage) and SONIA. The margin rates that Strix will be paying
will not be materially different to those on its existing revolving
credit facility.
Mark Bartlett, Chief Executive of Strix Group plc, said:
"We are delighted to enter this agreement to acquire Billi, a
leading multifunctional taps manufacturer and distributor. Billi
accelerates our strategy within our Water and Appliances categories
which is core to Strix's five year plan. We look forward to
welcoming the Billi team to the Strix Group and working together to
grow our combined businesses."
(1) Accretion figures are calculated based on market consensus
as at 4(th) October 2022, based on analyst notes released after the
publication of the interim results on 21(st) September 2022
Note: all figures are calculated using an AUD:GBP exchange rate
of 0.58
For further enquiries, please contact:
Strix Group Plc Tel: +44 (0) 1624
829829
Mark Bartlett, CEO
Raudres Wong, CFO
Zeus (Joint financial adviser and nominated +44 (0) 20 3829
adviser) 5000
Nick Cowles / Jamie Peel / Jordan Warburton /
Matt Hogg (Investment Banking)
Dominic King (Corporate Broking)
Stifel Nicolaus Europe Limited (Joint financial +44 (0) 20 7710
adviser and debt adviser) 7600
Matthew Blawat / Francis North
+44 (0) 20 3934
IFC Advisory Limited (Financial PR and IR) 6630
Graham Herring / Tim Metcalfe / Florence Chandler
Market Abuse Regulation (EU) NO. 596/2014
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of the Company is Mark Bartlett.
Information on Strix
Isle of Man based Strix, is a global leader in the design,
manufacture and supply of kettle safety controls and other
components and devices involving water heating and temperature
control, steam management and water filtration.
Strix's core product range comprises a variety of safety
controls for small domestic appliances, primarily kettles. Kettle
safety controls require precision engineering and intricate
knowledge of material properties in order to repeatedly function
correctly. Strix has built up market leading capability and
know-how in this field since being founded in 1982.
Strix is admitted to trading on the AIM Market of the London
Stock Exchange (AIM: KETL).
Information on Billi
Established in 1989 and headquartered in Melbourne, with
distribution channels located across Australia, and internationally
in New Zealand, UK, Hong Kong, Singapore and China, Billi is
renowned for its premium filtered and temperature-controlled water
systems and manufacturing innovation. Billi is led by a highly
experienced management team with over 50 years of expertise in
leadership positions.
Products are marketed under two distinct ranges - 'Billi for
Work' (commercial) and 'Billi for Home' (residential), both sets of
products are fitted with industry leading features such as
water-cooled technology and space saving features. The core product
range is supported by consumable offerings (filters, CO2
cannisters, spare parts) and service (plans and reactive). The
Billi products are first choice for architects and designers for
specifications of products with an ESG focus, due to Billi's strong
ESG credentials. Billi was certified by Global Greentag, the WELL
building institute and Green Gas and has positioned itself at the
forefront of ESG in the premium filtered water systems
category.
Billi operates in the high growth and strategically important
hot tap and water filtration markets. Businesses and consumers are
increasingly becoming health and environmentally conscious and so
Billi has benefitted from the shift away from bottled beverage
consumption and the perception of filtered water systems being seen
as a must-have product in the home and office. As a result, Billi
has seen a c.6% CAGR growth in its commercial channel and c.30%
CAGR growth in its residential channel.
Billi has a total of 216 employees.
Cautionary statements
Certain statements in this Announcement are forward-looking
statements, which include all statements other than statements of
historical fact and which are based on the Company's expectations,
intentions and projections regarding the Company's future financial
condition, performance, anticipated events, strategic initiatives,
or trends, the future performance of the Company resulting from the
Acquisition and other matters that are not historical facts. These
forward-looking statements, which may use words such as " aim " , "
anticipate " , " believe " , " could " , " intend " , " estimate "
, " expect " (or the negatives thereof) and words of similar
meaning. These forward-looking statements are not guarantees of
future performance and involve known and unknown risks,
assumptions, uncertainties and other factors that could cause the
actual results of operations, financial condition, performance,
liquidity and dividend policy and the development of the industries
in which the Company's and Billi's businesses operate to differ
materially from those expressed or implied by the forward-looking
statements. Undue reliance should not be placed on such
forward-looking statements. In particular, but without prejudice to
the generality of the above, no representation or warranty is
given, and no responsibility or liability is accepted, either as to
the achievement or reasonableness of any future projections,
forecasts, estimates or statements as to any prospects or future
returns contained or referred to in this Announcement or in
relation to the basis or assumptions underlying such projections or
forecasts. Forward-looking statements speak only as of the date of
such statements. Except as required by applicable law, the Company,
Stifel, Zeus and their respective affiliates undertake no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise. Results can be positively or negatively affected by
market conditions beyond the control of the Company or any other
person. No statement in this announcement is intended to be a
profit forecast.
Stifel Nicolaus Europe Limited ( " Stifel " ) and Zeus Capital
Limited ( " Zeus " ), each of which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, are acting
exclusively for the Company and for no one else in connection with
the Acquisition and will not regard any other person (whether or
not a recipient of this announcement) as a client in relation to
the Acquisition or any other matter referred to in this
announcement, and will not be responsible to anyone other than the
Company for providing the protections afforded to their respective
clients nor for providing advice in relation to the Acquisition, or
any other matter referred to in this announcement. The
responsibilities of Zeus as the Company's nominated adviser under
the AIM Rules for Companies and the AIM Rules for Nominated
Advisers are owed solely to the London Stock Exchange and are not
owed to the Company or any director, shareholder or any other
person.
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