Toilet roll firm Accrol ready for lockdown, buys LTC

Blackburn-based toilet roll maker Accrol Group said on Monday it entered into a conditional agreement to acquire tissue company LTC Group for an enterprise value of up to £41.8 million.

The deal comprises an initial consideration of £35 million and up to a further £6.8 million deferred consideration due in 2021 “contingent on certain performance criteria being achieved.”

Accrol also said that following the UK Government’s announcement that a second lockdown is being initiated from November 5, “as an essential service provider” it expects to operate normally throughout the lockdown period.

“During the first nationwide lockdown in the Spring, Accrol operated at full capacity to supply the heightened consumer demand for its toilet roll and other tissue products and remained fully operational across its three sites, successfully protecting the health and safety of its employees throughout and subsequently through the period of regional restrictions,” said Accrol.

“The business prepared for a second national lockdown and heightened restrictions and is ready to satisfy additional demand, should it materialise.” 

Accrol intends to finance the acquisition and associated costs via a conditional placing of shares at 44p with institutional and other investors to raise £38.5 million. 

Accrol also intends to raise up to a further £4.1 million via an open offer to shareholders “primarily to provide the company with additional working capital and to further strengthen its balance sheet.”

Accrol executive chairman Dan Wright said: “I am delighted to announce the conditional acquisition of the LTC Group, which is fully aligned with our ‘Brand Killers’ growth strategy.

“We have been very selective about Accrol’s first acquisition, and LTC’s scale and quality demonstrates the ambitions we have for the Group. 

“Accrol has a highly experienced senior management team with proven and relevant M&A integration skills, which is committed to building a world-class, operationally efficient business of size and scale and delivering substantial shareholder returns through organic and acquisitive growth.

“With c.£25 million having been invested in the LTC business since its foundation in 2014, it is equipped with top quality machines and has highly capable day-to-day operational leadership, on which we can build.

“I look forward to welcoming the LTC team to the group and to an exciting future for our combined business.”       

Accrol CEO Gareth Jenkins said: “This is a step change for Accrol.

“LTC adds significant capacity to our existing business, which is already growing ahead of the market, as well as immediately enhancing the earnings of the group. 

“In addition to bringing a wider customer base, it increases the size and scale of the business, enabling greater cost efficiencies and improved market positioning. 

“The group’s cash flow will also benefit from the acquisition, not least because we are able to defer a £5 million investment in a new line, planned for Q4 FY21, and also because of the cash generative nature of LTC.” 

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.