PACKAGING business Macfarlane Group has acquired the polythene and paper business of Edward McNeil, owned by Samuel Kingsley, for up to £1.8 million.
The deal sees Glasgow-based Edward McNeil’s business and staff transfer to Macfarlane's Linwood base. No buildings or plant were included in the deal.
The purchase continues Macfarlane’s bolt-on acquisition strategy, marking its second of the year and fifth since 2014. The company has now invested £15m on acquisitions over this period.
It comes following chief executive Peter Atkinson’s assertion in February that the company would make at least two acquisitions in 2016 as it aimed to consolidate a fragmented marketplace.
He revealed that Macfarlane was hoping to conclude one further acquisition this year. “We have targeted two to three businesses per annum. We’ve now got two early on in 2016 and I hope to do one more,” he said.
Mr Atkinson said Edward McNeil fulfilled several of the criteria Macfarlane looks for in targets. “It’s a high-quality family business with a strong local presence. It was looking to sell and it complements the Macfarlane Packaging Distribution business based in Linwood and strengthens our presence in Scotland,” he said.
Edward McNeil is a fourth-generation packaging business that has traded since 1919. It currently has 12 employees and is an established regional distributor of protective packaging materials. In the year to December 31 2015 the business generated sales of around £3.6m.
Macfarlane will pay up to £1.8m for the business from existing borrowing facilities, with the deferred consideration of £150,000 payable in the next twelve months, based on certain working capital targets. Edward McNeil's latest accounts showed a retained profit of £158,000 and shareholder funds of £13.5m for the year ending December 31 2014.
The purchase follows the acquisition last month of Colton Packaging Teeside for up to £1.25 million.
Macfarlane last year posted a 21 per cent jump in pre-tax profits to £6.8m.
The UK packaging industry has an estimated 100 distributors with revenues under £10m. Mr Atkinson said: “It’s a hugely fragmented market with lots of quality family companies that don’t have a succession plan in place.”
He said that targets were strong firms that could be integrated and contribute to Macfarlane’s success from day one.
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