LONDON, UK: Franchise Brands plc may acquire Hydraulic Authority I Limited, the owner of Pirtek Europe, for a consideration of £200 million. Franchise Brands will also pay £12.2 million for cash, debt and working capital adjustments.
In line with Franchise Brands’ strategy to complement organic growth with selective accretive acquisitions focused on B2B franchise systems of van-based businesses that provide essential services, Pirtek represents the opportunity to acquire a complementary B2B franchise business of scale that will expand the Group’s presence across a number of key European countries.
Stephen Hemsley, Executive Chairman of the Company, commented: “We are delighted to announce the proposed transformational acquisition of Pirtek Europe, a high quality provider of mission-critical, emergency response on-site hydraulic hose replacement and associated services.
The Acquisition brings an established business of scale with an attractive financial profile and growth prospects and significantly expands the Group’s range of B2B services, customer base and end markets.
Building on the strong performance of the Group’s acquisition of Filta in March 2022, which brought an international footprint in North America and Europe, Pirtek Europe extends the Group’s European presence across several key countries, providing a platform from which to launch the Group’s existing brands.
By expanding the Group’s operations to ten countries, the Acquisition will significantly advance the Board’s aim to create a market leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and continental Europe.
We look forward to working with Pirtek Europe’s strong management team to accelerate growth and drive operational leverage across the combined business.”
The acquisition is conditional on, inter alia, completion of the Fundraise and the passing of the Resolutions at the General Meeting.
The acquisition and working capital requirements of Pirtek Europe are to be funded by new bank debt facilities of £110 million and a minimum of £110 million in equity issued by the company.
The equity issue will comprise: (i) Consideration Shares up to £18.85 million; (ii) a Subscription with Pirtek management and employees of approximately £4.8 million; and (iii) a Placing to raise at least £90 million. The placing will be undertaken at 180 pence per share by way of an accelerated bookbuild.
Allenby Capital Limited and Dowgate Capital Limited are acting as bookrunners in the UK and Stifel Nicolaus Europe Limited (Stifel) is acting as bookrunner for the US and Europe in respect of the placing.
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