RS Group to acquire Distrelec B.V. for a consideration of €365 million

LONDON, UK: RS Group Plc has reached agreement to acquire Distrelec B.V., a high-service, digital-led distributor of industrial and MRO products for a consideration of €365 million (c. £323 million) on a cash-free and debt-free basis.

The consideration represents an acquisition multiple of under 11x adjusted EBIT on a 12-month basis to 31 December 2022.

Distrelec B.V. is a complementary business to RS; a high-service distributor of industrial and MRO products with a comparable product mix and customer-centric focus. There is a cultural and strategic fit between the two businesses.

Like RS, Distrelec promotes a high-performance culture with good levels of employee engagement and satisfaction. Distrelec serves c. 180,000 customers across 19 countries and has very low customer concentration.

Around two thirds of Distrelec’s revenue is from digital channels, the average order value is comparable to RS and product availability is industry leading.

The acquisition of Distrelec significantly expands RS presence in continental Europe. Distrelec has a strong competitive position in attractive European markets, increasing revenue by c. 40% in DACH (Germany, Austria and Switzerland), c. 80% in Scandinavia and adding scale in Italy, Benelux and Eastern Europe. The combination of Distrelec and RS in these key markets will leverage existing operations to drive value-accretive growth.

For the year ended 31 December 2022, Distrelec B.V. generated revenue of €270 million and EBIT of €34 million.

The acquisition will be financed from our existing resources and the addition of a new three-year acquisition term loan facility of €150 million.

Completion is expected within two to three months, subject to customary closing conditions including German, Austrian and Italian regulatory clearance.

Following the acquisition, RS balance sheet will remain strong, with a pro forma net debt to adjusted EBITDA, based on consensus estimates to 31 March 2023, of around 1x, well within the Group’s banking covenants leaving plenty of financing capacity to continue driving organic and inorganic growth ambitions.

Simon Pryce, Chief Executive Officer, commented: “Strategic acquisitions that are value creative is part of our strategy, and I’m pleased with what I’ve seen of our disciplined identification, assessment, valuation and integration processes.

These have helped to drive good progress at Risoul since we acquired it in January 2023. Distrelec is a complementary business to RS with excellent value creation potential under our ownership.

It materially strengthens our presence in key European markets, there is a strong cultural and operational fit and there are significant potential soft and hard synergies from the combination. We look forward to welcoming Distrelec B.V. to RS and to realising the significant potential growth and value creation opportunities it creates for all our stakeholders.”

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