Supreme (LON:SUP) - link to research note here: https://www.equitydevelopment....
Supreme has announced the acquisition of Clearly Drinks Ltd., for a total net cash (debt free) consideration of £15m, funded from cash. Clearly Drinks is a manufacturer of specialised canned and bottled-at-source spring water and soft drinks with FY23 annual turnover of £22m and EBITDA of £3.0m. This is a significant diversification, which increases the FY25E contribution from non-vaping revenue streams from £85m (38% of total) to £100m (42%).
The acquisition of Clearly creates a new Supreme Business Category. We estimate that the immediately earnings enhancing acquisition should add £14.7m to our FY25 revenue outlook based on estimated 5%YoY Clearly Drinks growth (pro rata), and (adj.) EBITDA by £2.0m (13.6% margin). FY25E (adj. dil.) EPS increases from 18.5p to 19.8p (+6.7%). Supreme reports full year FY24 results on 2 July offering the opportunity to review estimates and add the medium-term impact on earnings.
