LONDON, UK: Coats Group plc, the world’s leading industrial thread manufacturer, has signed a definitive agreement to acquire 100% of Texon International Group Limited, a leading footwear solutions provider, for an enterprise value of $237 million. The acquisition is expected to complete in July, a bourse filing said.
Texon, a company with operations in Asia and Europe, supplies high quality structural components to the global footwear market. The business is one of the market leaders in innovation and supplies high-performance sustainable materials, including heel counters, toe puffs and insoles to the highly attractive premium athleisure footwear market.
Texon is a complementary addition to Coats’ existing footwear business with attractive commercial opportunities by leveraging Coats’ existing footprint. Texon has a long heritage as a leading supplier to the world’s leading brands and is anticipated to deliver attractive high single digit growth in a fragmented market.
Texon is focused on sustainability, targeting zero-waste by 2025 with its broad suite of sustainable product offerings supporting customers to fulfil their own ambitions in sustainability, which will enable Texon to further strengthen its existing presence amongst leading global footwear brands.
Under the terms of the transaction, Coats has agreed to pay an Enterprise Value of $237 million, and a total net cash consideration of $211 million after deducting assumed retirement liabilities and other customary adjustments.
The acquisition is expected to be earnings accretive in year 1 and will be funded initially through a bridge financing facility with net leverage to remain within the Group’s stated target of 1.0x to 2.0x.
The acquisition is expected to generate annual synergies of approximately $5 million by the end of the second full year of ownership through efficiencies in commercial, procurement, marketing, distribution and production.
Rajiv Sharma, Coats Group Chief Executive, said: “The acquisition of Texon will strengthen our existing presence in the highly attractive athleisure footwear market. The business is complementary to Coats and provides attractive future commercial opportunities as we work together leveraging our combined expertise and knowledge to succeed with our customers. We recognise and share Texon’s focus on sustainability and innovation and believe that this acquisition strengthens our ability to fulfil these shared ambitions.”
For the year ended 31 December 2021, Texon generated revenue of $132 million, EBITDA of $21 million1 and adjusted operating profit of $17 million. Gross assets subject to the transaction are $150 million. June LTM is on track to deliver revenue of $145 million.