Macfarlane Group has returned to the acquisition trail with a deal to buy a firm in East Anglia for more than £3 million.
The Glasgow-based company has snapped up the “well-established” Allpack Packaging Supplies, which provides protective packaging products to customers in a wide range of sectors from its warehouse facilities near Bury St Edmonds.
The deal sees Macfarlane acquire 100% of Allpack for a maximum cash consideration worth of £3.25m, including an earn-out of up to £0.75m, based on agreed profit targets over one year. Allpack’s 10 employees, including its three directors, will remain with the business.
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The Scottish firm said the earnings-accretive acquisition demonstrates its “buy and build” strategy designed to increase shareholder value. Allpack made a pre-tax profit of £0.6m on sales of £3m in the year ended December 31.
Macfarlane chief executive Peter Atkinson said: “This latest transaction follows three acquisitions undertaken in the prior 12 months, and clearly demonstrates further progress in executing against our buy and build strategy. Allpack is a well-run, successful protective packaging distributor with an experienced management team. The addition of Allpack to the Macfarlane Group further strengthens our ability to serve customers in East Anglia. We look forward to working with the team at Allpack to support its continued growth.”
House broker Shore Capital said Allpack was a “good strategic and complementary fit within Macfarlane's manufacturing operations”.
The broker said: “As part of the group, Allpack's and Macfarlane's customers are set to benefit from the extended/ broader range of bespoke protective packaging products/ services.
“We see synergistic opportunities for Macfarlane to cross-sell to Allpack's existing customers, as well as developing new customers from leveraging Allpack's strategic relationships across East Anglia.”
It added: “The Allpack acquisition is immediately earnings enhancing. Macfarlane retains a strong balance sheet with firepower to fund continuing organic and acquisitive growth, should further opportunities come to fruition.”
Earlier this month, Macfarlane, reported that strong performances from recent acquisitions had helped it overcome a dip in revenue to achieve a rise in profits in 2023.
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Pre-tax profits rose by 2% to £20.3m despite revenue falling by 3% to £280.7m.
Macfarlane noted that profits would have been higher but for a £1.5m deferred contingent payment linked to the May 2022 acquisition of German-based PackMann, which delivered a stronger operating performance than previously anticipated.
The company noted at the time that the outlook for the coming year was challenging as it flagged its strategy of securing new business to offset sluggish demand among retailers in its dominant packaging distribution business. Macfarlane said this would include more deals via its “well-developed pipeline of potential acquisitions”.
Mr Atkinson said: “We did three acquisitions in 2023 and we would expect to do something similar in 2024 - we are well-advanced with a number of opportunities.”
Shares in Macfarlane were up 1.18%, or 1.5p, at 129p around 10.05am this morning.
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