REG - Mpac Group PLC - Acquisition of Boston Conveyor & Automation, Inc

MPACAnnouncement

18/09/2024 07:00

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RNS Number : 6614E  Mpac Group PLC  18 September 2024

18 September 2024

 

 

Mpac Group plc

(''Mpac'', the "Company" or the "Group")

 

Acquisition of Boston Conveyor & Automation, Inc

 

 

Mpac Group plc, a global leader in high-speed packaging and automation
solutions, is pleased to announce that it has entered into an agreement with
Jim Laverdiere (the "Seller") to acquire the entire issued share capital of
Boston Conveyor & Automation, Inc. ("BCA"), a US-based supplier of robotic
automation and conveyor solutions to the food, life sciences and general
industry sectors (the "Acquisition"). The Board expects the Acquisition to be
earnings per share enhancing in the first full year following the Acquisition.

 

The aggregate consideration for the Acquisition is $17 million, before
customary adjustments for cash and working capital, consisting of $11 million
in cash (the "Cash Consideration") and $6 million which is being satisfied by
the issue of 1,059,349 new ordinary shares in the capital of Mpac at an issue
price of 430.0 pence, being the closing mid-market price on 17 September 2024
(the "Consideration Shares"). The Consideration Shares are subject to lock-in
and orderly market provisions which are further described below.

 

The Cash Consideration is being satisfied from the Group's existing cash
resources and its Revolving Credit Facility (the "RCF"). As part of the
Acquisition, the Group's lender has agreed to increase the RCF by £5 million
to £25 million so that the Group retains a strong balance sheet with undrawn
borrowing facilities available to fund its ongoing development and working
capital.

 

Background to and rationale for the Acquisition

 

BCA was founded in 2017 and is a provider of robotic automation and conveyer
solutions, principally to the food but also the life sciences and general
industrial sectors. BCA is based in Newburyport, Massachusetts and employs 50
staff.

 

BCA offers a full suite of process-oriented primary and secondary packaging,
pick and place lines and conveyor systems, specialising in customised, turnkey
systems, including those with hygienic design requirements. The Acquisition
operates upstream of Mpac's current solutions offering and represents a
compelling fit with Mpac's strategic intent of being a market leader in the
provision of full-line packaging solutions for the food and beverage,
healthcare and clean energy sectors.

 

The range of solutions offered by BCA gives further breadth and depth to
Mpac's capabilities, with a particular focus on handling and packaging of
products. BCA and Mpac have several clients in common and have historically
featured together on customer projects underlying the strategic value of the
Acquisition.

 

Mpac will continue to support BCA's strategic growth plans and talented staff,
providing access to the Group's resources, global sales and service network to
leverage growth opportunities in Mpac's existing core markets of healthcare
and food and beverage.

 

Jim Laverdiere, the former sole shareholder of BCA, will remain with the
business as President to continue the next phase of its growth strategy and
wider development of Mpac. The acquisition of BCA is expected to deliver sales
and service synergies through the leverage of the enlarged Group's customer
base and the pull-through of Mpac's existing technologies. The Acquisition
provides a significant growth opportunity into EMEA through Mpac's sales
presence, a geography previously unaddressed by BCA. In addition, Mpac will
benefit from BCA's position of strength in standard and complex conveyor
solutions, and food and material handling automation.

 

Historic financial performance of BCA

 

BCA's unaudited results on a trailing 12 months to 31 May 2024 showed sales of
$14.0 million and adjusted earnings before interest, tax and depreciation of
$2.8 million. The unaudited financial statements of BCA for the year to 31
December 2023 showed revenue of $13.4 million and profit before tax of $1.0
million. Unaudited net assets at 31 December 2023 were $1.4 million including
net cash of $1.0 million.

 

Lock in and orderly market provisions in respect of the Consideration Shares

 

As described above, the Company is issuing the Consideration Shares to the
Seller as part of the Acquisition. On Admission, defined below, the Seller
will be interested in 1,059,349 ordinary shares representing approximately 4.9
percent of the Company's issued share capital as enlarged by issuance of the
Consideration Shares.

 

The Consideration Shares are subject to a lock-up which ends three years after
completion of the Acquisition, except in order to satisfy the Seller's
associated tax liability on receiving the Consideration Shares, the Seller is
permitted to sell up to one third of his Consideration Shares within the first
year after completion once 60 days from completion have passed (the "Tax
Permitted Disposal"). The Seller has undertaken that any Consideration Shares
sold pursuant to the Tax Permitted Disposal will be effected through the
Company's Brokers to ensure an orderly market.

 

Total Voting Rights

 

An application will be made to the London Stock Exchange for the Consideration
Shares to be admitted to trading on AIM ("Admission") and it is expected that
Admission will become effective, and that dealings will commence, at 8.00 am.
on 24 September 2024.

 

Following Admission, the Company will have 21,533,773 ordinary shares in
issue, with voting rights attached. Of these, no ordinary shares are held
exclusive of voting rights in treasury. Therefore, the total number of voting
rights in the Company will be 21,533,773 and shareholders may use this figure
as the denominator for the calculations by which they will determine if they
are required to notify their interest, or a change to their interest, in the
Company.

 

Adam Holland, Chief Executive of Mpac, commented:

 

"I'm delighted to announce the acquisition of BCA, another key milestone in
Mpac's strategic journey, bringing capability upstream of our Langen and
Switchback businesses into the Group's customer offering. BCA is a
high-quality business with exceptionally talented employees, and further
expands Mpac's physical footprint in North America. I am excited by the
opportunity to provide the customers of both businesses with an expanded
technology capability. I am equally excited to welcome Jim Laverdiere and the
wider BCA team to Mpac."

 

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No. 596/2014

 

 

For further information, please contact:

 Mpac Group plc                                  Tel: +44(0)24 7642 1100

 Adam Holland, Chief Executive

 Will Wilkins, Group Finance Director

 Shore Capital (Nominated Adviser & Broker)      Tel: +44(0)20 7408 4050

 Advisory

 Patrick Castle

 Sophie Collins

 Broking

 Henry Willcocks

 Panmure Liberum (Joint Broker)                  Tel: +44 (0) 20 3100 2000

 Edward Mansfield

 Will King

 Anake Singh

 Hudson Sandler                                  Tel: +44 (0) 20 7796 4133

 Nick Lyon

 Nick Moore

 

 

Notes to Editor

 

Mpac (AIM: MPAC) is a global leader in engineering and technology, designing,
precision engineering, manufacturing, and supporting high-speed packaging
equipment and solutions.

 

Mpac serves 80 countries across four key regions around the world including
the Americas, EMEA, APAC and the UK. The Company operates in the attractive
growth markets of Food & Beverage, Healthcare and Clean Energy. These
targeted markets boast significant growth opportunities.

 

Through its core product lines - Lambert, Langen, Switchback and SIGA Vision -
the Company provides full line Original Equipment and Services for automated
high-speed packaging, from assembly of products through to case packing and
palletising. Mpac's Service offering ensures a stable and recurring revenue
after the sale of Original Equipment.

 

Mpac is a people-driven business. With more than 600 colleagues around the
world including c. 350 dedicated global engineers & designers. The
business is also underpinned by innovation, as one of Mpac's key strategic
pillars which remains fundamental to the Company's long-term sustainable
growth.

 

Mpac is headquartered in Tadcaster, UK and operates sites in the US, Canada,
the Netherlands and Singapore.

 

 

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