REG - Volution Group plc - Agreement to acquire Fantech Group in Australasia

VolutionAnnouncement

20/09/2024 07:00

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RNS Number : 9552E  Volution Group plc  20 September 2024

20 September 2024

 

 

Volution Group plc

 

Agreement to acquire Fantech Group in Australasia for AUD$280 million
(£144million(1))

 

Volution Group plc ("Volution" or the "Group"), a leading international
designer and manufacturer of energy efficient indoor air quality solutions, is
pleased to announce that it has signed an agreement to acquire the Fantech
Group of companies from the owners of the UK based Elta Group Ltd.

 

Fantech Australasia

 

The Group has signed an agreement to acquire 100% of the holding company of
the Fantech Australasia business ("Fantech" or "the Company") for an initial
consideration of AUD$220 million (£112.9 million(1)) on a debt/cash free
basis, with further non-contingent consideration of AUD$60 million (£30.8
million(1)) payable twelve months after the completion date.

 

For the financial year ended 31 March 2024, Fantech reported audited revenue
of AUD$ 177.0 million (£90.8 million(1)) and EBITDA of AUD$ 33.3 million
(£17.1 million(1)). The transaction is consistent with Volution's
long-established strategy of acquiring leading ventilation brands to extend
our routes to market and builds on the Group's successful expansion in the
region since our first acquisition of Simx in March 2018.

 

Fantech, which includes the Fantech, Ideal Air, NCS Acoustics, Air Design,
Major Air, Systemaire and Burra Steel brands, is a leading provider of both
commercial and residential ventilation in Australia and commercial ventilation
solutions in New Zealand. Originally formed in 1973 as the Air & Noise
Equipment Group and transitioning to the Fantech brand in 1982, Fantech has
been one of the leading providers of ventilation equipment in the region for
over 50 years. In 2021, the Company moved to a new 20,000m2 purpose-built and
future-proofed headquarters in Melbourne which has considerable operating
footprint capacity available, allowing for the continuation of its strong
growth trajectory. Fantech has 13 manufacturing, warehouse and sales locations
across Australia and New Zealand, and over 350 employees.

 

Transaction highlights:

 

-       The acquisition will enhance Volution's market position in the
Australasian region through Fantech's highly recognised and market leading
brands extending the Group's reach into new end market applications with
particular emphasis on the commercial sector.

-       Post completion of the transaction and on a pro-forma basis,
Australasia will represent over 30% of Volution's revenue.

-       In Australia, the Group will combine its existing leading range
of low energy ceiling fans, trading as Ventair, with Fantech, a leading
provider of commercial and residential ventilation.

-       In New Zealand, Fantech activities are primarily focused on the
commercial market, whereas Volution's existing Simx and DVS brands are mainly
residentially focused.

-       The acquisition gives the Group a broad and diversified customer
base with access to both distribution and trade contractor customers across
Australasia.

-       The acquisition will be earnings accretive immediately upon
completion, with the Group maintaining its adjusted operating margin post
completion above the long-term target of 20%.

 

Conditions to completion of the transaction include anti-trust approvals which
we are optimistic will be satisfied within approximately two to three months.

 

Refinancing of the Group's Revolving Credit Facility

 

The Group has recently completed the refinancing of its previous revolving
credit facility with a new £230 million multi-currency Sustainability Linked
Revolving Credit facility (plus £70 million uncommitted accordion
facility).  The new facility has an initial term of three years until
September 2027 with options to extend for up to two additional years.

 

The transaction will be financed using proceeds of the new facility plus cash
on the balance sheet.  Leverage (see note 3), which is expected to be c0.4x
at 31 July 2024, is expected to be in the range of 1.5-1.7x on a proforma
basis post completion of the transaction, with the Group's usual strong
de-leveraging profile taking effect after the payment of the deferred
consideration 12 months post completion.

 

Ronnie George, Volution Chief Executive Officer, commented:

 

"This acquisition, our largest to date, gives Volution a great platform to
continue our growth in Australasia. We are excited by the opportunities
available to us through owning such a well-respected and successful group of
brands. Fantech is a leading provider of commercial ventilation solutions in
Australia and New Zealand, and complements our existing local market positions
in Ventair, Simx and DVS Proven Systems very well.

 

"I would like to welcome our 350 Fantech colleagues to Volution and I look
forward to working closely with them once the acquisition completes. The
combination of Fantech's strong and longstanding trading in the region with
greater access to Volution's wide product portfolio gives us an enviable
platform for growth."

 

 

Volution will host a Zoom call for analysts and investors at 9.00am today.
Please contact FTI_Volution@fticonsulting.com for details and to register to
join.

 

-ends-

 

Notes:

1.   Based on an AUD$:£ exchange rate of 1.948:1 being the closing rate as
at 19 September 2024

2.   Cash conversion defined as: Adjusted operating cash flow / (Adjusted
operating profit + amortisation).

3.   Leverage defined as adjusted EBITDA divided by net debt (excl. IFRS16
liabilities)

 

 

For further information:

 

Volution Group plc

Ronnie George, Chief Executive
Officer                          +44 (0) 1293 441501

Andy O'Brien, Chief Financial
Officer                              +44 (0) 1293
441536

 

FTI
Consulting
+44 (0) 203 727 1340

Richard Mountain

Susanne Yule

 

This announcement includes inside information (as defined by Article 7 of the
Market Abuse Regulation (EU) No 596/2014, as it forms part of
the UK domestic laws by virtue of the European Union (Withdrawal) Act
2018).  Upon publication of this announcement, this information is now
considered to be in the public domain.  The person responsible for arranging
the release of this announcement on behalf of Volution is Fiona Smith, Company
Secretary.

 

Volution Group plc Legal Entity Identifier: 213800EPT84EQCDHO768.

 

Note to Editors:

 

Volution Group plc (LSE: FAN) is a leading international designer and
manufacturer of energy efficient indoor air quality solutions.  Volution
Group comprises 22 key brands across three regions:

 

UK: Vent-Axia, Manrose, Diffusion, National Ventilation, Airtech, Breathing
Buildings, Torin-Sifan.

Continental Europe: Fresh, PAX, VoltAir, Kair, Air Connection, Rtek,
inVENTer, Ventilair, ClimaRad, ERI Corporation, VMI, I-Vent.

Australasia: Simx, Ventair, Manrose, DVS.

 

For more information, please go to: www.volutiongroupplc.com
(http://www.volutiongroupplc.com/)

 

Cautionary statement regarding forward-looking statements

This document may contain forward-looking statements which are made in good
faith and are based on current expectations or beliefs, as well as assumptions
about future events. You can sometimes, but not always, identify these
statements by the use of a date in the future or such words as "will",
"anticipate", "estimate", "expect", "project", "intend", "plan", "should",
"may", "assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future performance
and are subject to factors that could cause our actual results to differ
materially from those expressed or implied by these statements. The Company
undertakes no obligation to update any forward-looking statements contained in
this document, whether as a result of new information, future events or
otherwise.

 

 

 

 

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