LONDON: Headlam Group has entered into an agreement to dispose of its wholly-owned Swiss business, Belcolor AG, to the management team of Belcolor (management buyout).
As a result of the disposal, Headlam will realise approximately £12.0 million in cash.
Belcolor is a floorcoverings distribution business based in St. Gallen, Switzerland, and represents the entirety of Headlam’s Swiss operations. Headlam’s Continental European operations accounted for 17.2% of total revenue in 2020, with Switzerland being the smallest reflecting the small landmass and population of the country.
For the year ended 31 December 2020, Belcolor reported revenue of £31.1 million and profit before tax of £1.1 million, with fairly uninterrupted operations during 2020 in contrast to the Company’s UK and French operations which were subject to stringent COVID-19 related lockdown measures.
While Belcolor is highly established and industry-leading in its country, there are limited avenues for meaningful organic or acquisitive growth. Additionally, the Swiss market varies significantly from the Company’s other geographic markets in terms of supplier base and product mix, and therefore there is limited ability to leverage group synergies.
The disposal will allow the Company to more effectively focus its activities and investments on its operations which offer greater opportunity. In-line with the Company’s Capital Allocation Priorities published in January 2021, the proceeds of the disposal will be directed towards investment in the Company’s operations to optimise performance and growth as well as expediate the attainment of the targeted net debt and dividend distribution parameters.
The management team will acquire 100% of Belcolor through a new entity, CH Floorcovering Group AG, while continuing to operate the business under the Belcolor name. Following formal completion of the disposal, anticipated on or around 17 May 2021, Headlam will have no further assets or operations in Switzerland, with its operations subsequently focused in the UK, France, and the Netherlands.
Headlam will realise approximately £12.0 million² in cash as a result of the disposal, comprising a pre-completion cash dividend of £11.1 million², and the balance payable in cash on or around formal completion. The gross assets subject to the disposal were approximately £18.0 million² as at 31 March 2021.
Headlam is Europe’s leading floorcoverings distributor, providing the channel between suppliers and trade customers of floorcoverings.
The Company’s customer base covers both the residential and commercial sectors, with the principal customer groups being independent retailers and smaller flooring contractors alongside other groups such as larger retailers, housebuilders, specifiers, and local authorities.
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