Coral Products acquired 100% of the share capital of Film & Foil Solutions from two private vendors for 3,000,000 which is to be paid in part payments, on Wednesday.
Coral Products is a specialist in the design, manufacture and supply of plastic products, and has acquired the entire issued share capital of Film & Foil Solutions, a leading converter and supplier of flexible packaging film, from two private individuals for consideration of £3m.
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The £3m consideration will be broken into 4 parts, where £1,348,760 will be paid in cash on completion, subject to any adjustment on the preparation of completion accounts.
Coral Products said, £750,000 will be paid by issuing shares in the company at a mid-market price of 15.5p on April 29, 2022.
These consideration shares will be settled from the company’s treasury shares, and the firm will make another notification when that happens.
A twelve-month lock-in period will apply to the consideration shares, during which time they will be unable to be sold or transferred said Coral Products.
Further cash payment of £566,240 to be retained in escrow in the event of a contract dispute and released to the vendors on a pound-for-pound basis upon settlement.
The remaining £335,000 cash payment will be kept in escrow against an insurance claim filed by Film & Foil and will be released to the vendors on a pound-for-pound basis if the claim’s minimum settlement sum is met.
The cash consideration for the acquisition is being met from Coral Products’ existing resources, but, as previously stated, the cash consideration under the sale and purchase agreement may be adjusted following the preparation of Completion Accounts if the net asset value falls below an agreed minimum target. If this occurs, more information will be released.
Film & Foil Solutions reported net assets of £3.37m, sales of £10.1m, and profit before tax of £61,000 in its unaudited financial results for the year ending December 31, 2020.
Film & Foil Solutions expects a loss before tax of £174k for the full year ended December 31, 2021, but an underlying profit of £541k after one-off adjustments.
“This acquisition reinforces our focus on niche, specialist operators in the plastics sector. F&F brings to the group another range of skills and market opportunities,” said Joe Grimmond, Executive Chairman, Coral Products.
“The company struggled following a fire in their manufacturing facility in 2019 but the Directors believe that with this transaction, the F&F management team can once again concentrate their efforts in growing the business. The Board anticipates that the acquisition will be earnings enhancing in its first year.”