London: Flowtech Fluidpower plc (AIM: FLO), the specialist technical provider of fluid power and motion control products and engineering services announces the acquisition of the business and certain assets of Thomas Wright/Thorite Group Limited.
 The transaction completed immediately following the appointment of Administrators, Interpath Advisory to Thorite.

Mike England, CEO of Flowtech said: “We are delighted to acquire this well-respected brand and skilled workforce. On behalf of all of us at Flowtech we welcome our new colleagues to the Group.

This is an exciting moment for us all as both businesses have a history of deep expertise and knowledge in power, motion and control.

For us at Flowtech, adding Thorite’s expertise in pneumatics, automation and compressed air capability is an excellent fit and aligns perfectly with our strategy – a world of motion – which will enhance our scale, margin profile, and help to accelerate market share gains.”

Thorite is a leading UK provider of pneumatics, compressed air, vacuum and fluid handling products and systems and has traded since 1850. It operates from seven sales and service centres across the UK.

There is a strong strategic rationale for the Acquisition and the potential for significant synergies for the combined businesses, with the benefits including:

·      Significant operational efficiencies, procurement leverage opportunities and economies of scale, which will lead to material cost savings and improved margins for the Group over the medium term

·      A well-developed value proposition, Thorite’s trading locations and only limited product overlap with Flowtech will provide expansion into new and complementary geographies within the UK, together with new products and services; and

·      It is anticipated that the enlarged business will also benefit from strong cross selling prospects across the respective  complementary customer bases.

Under the terms of the Acquisition, Flowtech will acquire all the plant and machinery, vehicles, stocks, and intangible assets of Thorite for a total cash consideration of £350,000 which will be funded from the Group’s existing bank facilities.

Flowtech has also repaid Thorite’s outstanding debtor finance facility of c.£1.7m in return for an assignment to the Group of a debtor book totalling c.£2.6m; this has also been funded from the Group’s bank facilities. A sharing arrangement relating to the excess of debtor book recoveries over and above the c.£1.7m paid has been agreed with the Administrator of Thorite.

In the audited accounts for the year ended 31 March 2023, Thorite generated revenue of £21.2m and delivered an operating profit of £79,000. The gross value of asset classes being acquired at the same date was £8.8m, inclusive of £3.8m in respect of the debtor book at that point in time.

Thorite has since experienced cash flow challenges and incurred operating losses due to a combination of internal issues and market headwinds. Thorite’s operating losses in the year to 31 March 2024 are estimated at £1.2m.

Through a combination of the strategic benefits and synergies already identified, the Board expects profitability to be restored in the first full year of ownership with the associated benefits to Group earnings