MACFARLANE Group has made its second acquisition of the year after agreeing to pay up to £7.5 million for Network Packaging.
Peter Atkinson, Macfarlane chief executive, said the move will improve the company's coverage in the Midlands as well as bringing in some new customers.
However, Mr Atkinson confirmed the main reason for moving on Wolverhampton-based Network was the overall quality of the company and its alignment with Macfarlane.
He said: "They have established a really strong presence in the internet retail and third-party logistics sector. It is very complementary to our strategy in those sectors."
All 25 staff at Network will transfer over as part of the deal.
Macfarlane is paying £4.3m in cash along with £600,000 in shares upfront with further payments being triggered in the final quarters of 2015 and 2016 if targets are met.
Network made £800,000 of operating profit on £7.8m turnover in 2013 and is expected to be earnings enhancing for its new owners in the current year.
Mr Atkinson said: "That is the benefit of buying a quality business. There are no significant reorganisation costs involved. We can move it forward positively from day one."
Macfarlane also anno-unced a £3m share placing, which will require to be approved at a general meeting at the end of this month.
Institutional investors have snapped up the eight million shares on offer already.
Mr Atkinson said: "The placing just increases our firepower alongside the new banking facility [agreed earlier this year]."
With Macfarlane about to enter its busiest trading period of the year, Mr Atkinson said further deals will take a "time-out" until 2015.
However he signalled more acquisitions are on the cards and said: "We have got a number of other things we are working on. It is genuinely a programme where we are in various stages of discussions with people.
"I would be disappointed if we don't have another acquisition to announce in the first part of 2015."
A note from Macfarlane's house broker Arden Partners said the deal gives Macfarlane the chance to try to move Network customers over to its national network. Arden expects the deal to add around £250,000 to Macfarlane's operating profits in 2014.
Macfarlane bought PSD Industrial Holdings, the parent of Lane Packaging, in May this year in a deal worth up to £1.1m.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article