Victoria acquisition of Keraben ‘transformational’ says joint bookrunner Cantor Fitzgerald Europe

The Board of Victoria (LSE: VCP), the international designers, manufacturers and distributors of innovative floorcoverings, is pleased to announce that it has entered into an agreement to acquire the entire issued share capital of Keraben Grupo S.A. (“Keraben“), a substantial European manufacturer of branded floor and wall ceramic tiles, for a total consideration of €274.1 million (£246.5 million) (the “Consideration“) from Tensile-Keraben Holdings S.a.r.l. (an associated company of Tensile Capital Management LLC) and the founding family (the “Vendors”) (the “Acquisition“).
The Consideration is payable in cash on completion and will be satisfied in part through a placing of 22,988,506 new Ordinary Shares (consisting of 20,271,140 “Vendor Placing Shares” and 2,717,366 “Firm Placing Shares”) at a price of 783 pence per Ordinary Share (the “Placing Price“) to raise gross proceeds of approximately £180 million. The Vendor Placing Shares and Firm Placing Shares have been placed by Cantor Fitzgerald Europe and Berenberg, as Joint Bookrunners, with certain existing and new institutional investors.
Subject to admission of the Vendor Placing Shares and the Firm Placing Shares, the Acquisition is expected to complete today, Thursday 16 November 2017.

Highlights

 Acquisition 

• Keraben is a large, well-invested business with a strong market It is led by a proven, established management team which has successfully and consistently grown the business over recent years, executing a clear strategy to drive continued profitable growth.
• The Acquisition is expected to be significantly accretive to earnings per share for Victoria shareholders in the first full year of ownership (even after accounting for the impact of the new Ordinary Shares).
• For the year ended 31 December 2016, Keraben generated audited revenues of €118.3 million (£106.4 million), adjusted EBITDA of €36.4 million (£7 million), and adjusted EBIT of €27.5 million (£24.7 million). The Board expects that normalised earnings should be about 10% higher for the year to 31 December 2017.
• The Acquisition continues Victoria’s drive into the European hard flooring market, following the recently announced proposed acquisition of Ceramiche Serra p.A. (which is expected to complete in December 2017).
• The Acquisition further enhances Victoria’s international reach and diversification of
• In line with Victoria’s acquisition criteria, the management team at Keraben are financially incentivised to run the business as part of Victoria for a minimum period of three years and continuing to develop its

The Placing 

• 20,271,140 Vendor Placing Shares and 2,717,366 Firm Placing Shares have been placed at the Placing Price with certain existing and new institutional investors, raising gross proceeds of £180
• The Vendor Placing will be used to part-fund the Acquisition, with the balance of the Acquisition consideration (plus associated transaction costs, taxes and other expenses) to be funded from a new €178 million banking facility provided by the Company’s existing group of
• The Firm Placing will be deployed in due course to part-fund further carefully scrutinised acquisitions as the Company continues to execute its strategy designed to create value for
• The Vendor Placing and Firm Placing (together the “Placing”) are conditional upon admission of the Vendor Placing Shares and Firm Placing Shares to trading on AIM (“Admission“) by no later than 00 a.m. today, Thursday 16 November 2017.
• Cantor Fitzgerald Europe acted as Nominated Adviser, Joint Bookrunner and Broker in relation to the Joh. Berenberg, Gossler & Co KG acted as Joint Bookrunner and Broker in relation to the Placing.

Geoff Wilding, Chairman of Victoria commented:

 “We believe that Keraben is a high-quality addition to the Group. Notwithstanding its further strong organic growth prospects, the acquisition of Keraben will be materially earnings accretive in the first year of ownership and continues to increase our geographic diversity. Post-completion, over 50 per cent. of Victoria’s earnings will be generated from outside the UK – continuing our transformation into a genuinely international flooring business.
 We are delighted by the level of support we have received from both existing and new investors, with the placing oversubscribed by a multiple of the funds sought.”

Rick Thompson, Managing Director, Head of Corporate Finance at Cantor Fitzgerald Europe commented:

‘This is a transformative acquisition for Victoria as it significantly boosts its profitability and expands its international footprint and growth potential. The strong demand from new and existing investors, with the placing materially oversubscribed, testifies to the quality of the acquisition with Victoria winning the deal in a competitive sale process against prominent private equity investors.’