Polygiene - Agreement to acquire UK based Addmaster
Will create a global antimicrobial powerhouse Large potential synergies to be realized Transaction indicates R12 EV/EBITDA of 13.5x Vertical integration of current supplier Addmaster Polygiene announced 10 December that it has entered into a conditional agreement to acquire the UK based Addmaster, which is a leading global supplier of antibacterial additives for hard surfaces. It is also a current supplier to Polygiene and ~25% of its R12 sales were generated by Polygiene, which represents ~80% of Polygienes COGS. The purchase price represents an EV of SEK 374m, of which SEK 249m shall be paid in cash and SEK 125m in equity through 4.56m new Polygiene shares. The transaction also constitutes of a private placement of SEK 280m, or 10.26m additional new shares, in order to be able to pay the cash amount of the deal and to finance working capital needs and the transaction costs.
In total, it leads to a dilution towards current shareholders of 41.9%. However, if we add the R12 EBITDA of SEK 27.6m from Addmaster to our current 2021 estimates, we get an EBITDA per share of SEK 1.7, up from SEK 1.6 per share prior to the transaction. Addmaster focuses on additives for hard surfaces The deal is equivalent to a R12 EV/EBITDA of 13.5x for a business that has a 6-year sales and EBITDA CAGR of 15% and 21%, respectively.
Addmaster mainly focuses on additives for hard surfaces and has over 150 customers, including blue chip customers such as Dyson, Akzo Nobel, Marks & Spencer, Jimmy Choo, Atlas Copco and Tesco. The company has, like Polygiene, seen a huge upswing in demand following COVID-19 and the total value of new customer test projects in October 2020 was equivalent to the total value of new customer test projects for the period from October 2019 to September 2020. Mgmt.
sees potential EBIT synergies of SEK 61m in ’21-‘23 Management sees potential EBIT synergies of SEK 61m between 2021 and 2023, of which SEK 55m from cross-selling and SEK 6m from cost savings. W....