London, England, December 8--Low & Bonar announces the acquisition of the entire issued share capital of LCM Construction Products Ltd (trading as Adfil) for a consideration of up to £12.8 million in cash.
Adfil is a specialist polypropylene fiber manufacturer whose principal activity is the production and supply of fibers for use as an additive to concrete in order to provide strength and enhanced resistance to surface cracking.
Major projects where Adfil's products have been used include the new Terminal 5 at Heathrow Airport and the Channel Tunnel Rail Link. In the year to December 31, 2003, Adfil reported sales of £9.6 million, profit before interest, tax and goodwill amortisation of £1.7 million and as at that date had net assets of £1.4 million. Profit before tax was £1.0 million.
The acquisition will complement Low & Bonar's existing speciality fibers activities and is expected to make a positive contribution to earnings from the first year. The sellers of Adfil are private equity house Lloyds TSB Development Capital (LDC) and the existing management team. The management team will remain with the business. Deferred and contingent consideration will be up to £2.8 million of the £12.8 million. The consideration will be met from existing financial resources.
Commenting on the acquisition Group Chief Executive, Paul Forman, said, "We welcome Adfil to the Low & Bonar Group. It has a strong market position on a global basis, is one of the most innovative companies in its industry and has a well-regarded management team. This acquisition complements the other specialist product suppliers in our Yarns and Fabrics Division. It broadens our product portfolio, gives us access to new customer groups and will contribute to group earnings from the start. This is the second acquisition for this division in the last six months and is consistent with our strategy of pursuing both acquisition-led and organic growth."
Low & Bonar will this week begin a series of meetings to discuss the year ending November 30, 2004. In these meetings the company will confirm that, notwithstanding a significant increase in raw material prices and a continuing competitive environment in its end markets, trading for the year remains in line with our expectations.
The company will also confirm that it anticipates raw material prices, especially polymers, to continue at very high levels in 2005. However, it expects to offset a significant proportion of this impact by continuing to grow sales volumes, raise prices selectively and improve operating efficiency across its business.
Low & Bonar will release its preliminary results for the year ended 30 November 2004 in mid-February 2005.
