MACFARLANE, the Glasgow-based packaging heavyweight, has bought another firm in England and underlined its appetite for further acquisitions in spite of the uncertainty around Brexit.
Weeks after celebrating its 70th anniversary, Macfarlane yesterday revealed that it had acquired Buckinghamshire-based Ecopac for up to £3.9m as the group eyes continued growth.
The acquisition comes with businesses still in the dark about what the UK leaving the European Union will mean, as Theresa May and Jeremy Corbyn try to agree on a deal to put to the Westminster Parliament.
Read more: Blair - 'Scotland is right to stay in EU but it would be wrong to leave UK'
However, Macfarlane chief executive Peter Atkinson said the company had seen no sign that concern about Brexit was weighing on the markets it serves. These include the distribution of protective packaging to e-commerce retailers such as Dunelm and Urban Outfitters.
First quarter sales have been boosted by stock-building by firms that want to protect themselves against possible disruption in the event Brexit goes ahead.
“We’re not seeing any slow down in demand for packaging,” said Mr Atkinson.
He added: “We see the UK as a good place to grow. We are market leaders in our product area and we want to build on that.”
Read more: Glasgow firm upbeat over Euro prospects as profits surge
Mr Atkinson said Macfarlane has a strong pipeline of potential acquisitions and expects to complete one more during the current year.
The company may make acquisitions in Europe, where it generated two per cent of its revenues last year. It is working on developing its offer, signalling belief in the potential of the European market.
Macfarlane has drawn up contingency plans with suppliers for a no-deal Brexit.
However, the purchase of Ecopac reflects directors’ confidence that Macfarlane can use acquisitions to maintain strong long-term growth in the UK.
Read more: Macfarlane directors miss out on bonuses
Describing Ecopac as a profitable packaging business that met the group’s strict acquisition criteria, Mr Atkinson noted: “I am confident that the business will prove to be an excellent acquisition improving our geographic penetration and extending our customer reach.”
The Ecopac deal will increase Macfarlane’s presence in the Home Counties of England. The business will bring new suppliers and customers and quality people to Macfarlane.
Noting Macfarlane has achieved nine successive increases in annual profits, Mr Atkinson said growth had been supported by the acquisition of ten firms in the last five years. Macfarlane has focused on buying businesses that have a strong presence in local areas and which will benefit from becoming part of a bigger group.
It has bought firms based in Nottinghamshire, Leicestershire and Lancashire in recent months.Those deals helped Macfarlane grow profits by 17% last year to £10.9m. Sales rose 11% to £217.3m.
The trading success has helped Macfarlane win increased attention from stock market investors, although it operates in a product sector Mr Atkinson said may not be seen as being the most dynamic.
Shares in Macfarlane rose 3% , 3.2p,yesterday to close at 105p giving the firm a market capitalisation of around £160m.
The shares sold for less than 40p each in November 2014, after peaking at 262p in May 1996.
Lord Macfarlane stood down as chairman in 1998, some 49 years after he founded the group.
Read more: Macfarlane goes out in style after long innings
Mr Atkinson confirmed the group expects to keep its headquarters in Scotland. It has 105 employees based in the country, out of a total of 935.
House broker Arden Partners said:“Macfarlane’s market positioning, strong management team and demonstrable track record support the potential for an excellent and robust growth profile.”
Macfarlane will pay an initial £3.1m for Ecopac with up to £0.8m more payable dependent on results.
Ecopac,made £0.5m profits on sales of £6m in the year to end March 2018. It has 21 employees.
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