LONDON, UK: REACT Group Plc (AIM: REAT) has completed the acquisition of LaddersFree Ltd., an established nationwide commercial window, gutter and cladding cleaning business, for a total consideration of up to £8.5 million on a debt-free and cash-free basis.

This is REACT Group’s second acquisition and represents a further step in the company’s ambition to achieve its stated growth strategy. The initial cash consideration is to be funded from the net proceeds of the placing announced by the Company on 14 April 2022.

Acquisition highlights

• Acquisition of LaddersFree, a profitable, cash generative commercial window cleaning business serving local, regional and national customers
• Consistent track record of organic revenue growth and profitability
• High level of recurring revenue with clients typically working with LaddersFree on a minimum 12-month rolling term providing visibility of future revenues and income
• The business is scalable with a very low working capital requirement and has potential for strong organic growth
• LaddersFree has a diverse client base across the commercial property, retail, hospitality, leisure and automotive sectors
• Large competitive national ecosystem of ‘local’ specialist subcontractors which the Board believes gives the sector a high barrier to entry
• Broadens REACT’s customer base and reduces dependence on reactive and ad hoc work
• In line with REACT’s stated strategy of building a leading industry position through organic growth and via strategic acquisitions

About LaddersFree

Founded in 2002, LaddersFree is a commercial window cleaning business, serving local, regional and national customers. With an established network of over 300 approved service partners, LaddersFree utilises local window cleaning companies to offer its services to all areas of mainland UK. LaddersFree employs seven individuals, with one office located in Topsham, near Exeter, in Devon.

Shaun Doak, Chief Executive Officer of REACT, said: “We are delighted to welcome Jason, Justin and the team at LaddersFree into the REACT family. Over the last 20 years they have established a very strong reputation for consistently delivering high-quality services greatly valued by local, regional and national customers.

The LaddersFree value proposition to both customers and their network of specialist service providers is incredibly attractive to our business. Combined with the team’s focus and customer-centric service culture, they fit perfectly within the Group.

We are excited by the opportunities that lay ahead as we continue to invest in profitable growth and offer our increasingly unique brand of services across the broadening customer base of the business.”

Acquisition terms

Total consideration of up to £8.5 million on a debt-free and cash-free basis (subject to working capital adjustments), comprising:

• £4.65 million in cash (“Initial Cash Consideration”) payable on completion of the Acquisition (“Completion”), subject to any adjustment on preparation of completion accounts;
• £1.0 million through the issue of 83,333,333 ordinary shares of 0.25 pence in the capital of the Company (“Consideration Shares”) on Completion to Jason Korinek and Justin Korinek (the “Founders”) at an issue price of 1.2 pence per Consideration Share. Half of the Consideration Shares will be subject to a 6 month lock in period and the other half of the Consideration Shares will be subject to a lock in period of 24 months during which, in each case, the relevant Consideration Shares cannot be sold or transferred. This is followed, in each case, by a 12 month orderly market period;
• deferred cash consideration of £1.45 million with a 5 per cent. coupon, to be paid in four instalments every six months beginning on 1 December 2022; and
• performance based contingent consideration of up to £1.4 million, which will pay six times the increase (only) of EBITDA for the financial year ending 30 November 2022 over and above £1.2 million, in three instalments with the final payment due to be made on 1 June 2024.

www.reactsc.co.uk