Michelmersh is paying €9.9m (£8.7m), with €9.4m paid on completion and a deferred consideration of 400,000 Michelmersh ordinary shares – with a value no greater than €500,000 – in 24 months if certain targets are met.
Floren, which has been in operation since 1896, made 19.5 million wirecut bricks last year. They were predominantly sold in Belgian and the UK , generating unaudited revenues of €5.7m and earnings before interest, taxes, depreciation, and amortisation (Ebitda) of €1.75m.
Michelmersh sees the strategic acquisition as enhancing its product portfolio, significantly increasing the group's overall output and providing a foothold in new European markets. The company has also announced that it is seeking to raise up to £5m through a placing of new ordinary shares, though completion of the acquisition is not conditional on the new shares.
Michelmersh said tha it believes there is potential to increase the current Floren output of 19.5 million bricks a year with future capital investment.
As part of the acquisition, Michelmersh is acquiring 120 acres of land, of which 60 acres is used by plant operations. Michelmersh has undertaken a valuation exercise on the land owned by Floren, which indicated a potential value of up to €9m. The directors believe Floren has clay reserves that will support production on site for up to 25 years.
The vendors of Floren will remain within the business for 24 months to oversee operations and support the integration into the group.