Franchise Brands to snap up Pirtek Europe in £200m deal

4th Apr 2023 10:11

(Sharecast News) - Franchise Brands has agreed to buy Pirtek Europe in a £212m deal intended to bolster its European presence.

The AIM-listed firm will pay £200m plus £12.2m for cash, debt and working capital adjustments for Pirtek's owner, Hydraulic Authority I Ltd.

Pirtek Europe is a mission-critical hydraulic hose replacement service, operating via 213 service centres and 838 vans, and has 70 franchisees. It currently operates in eight European countries, including the UK, with the right to operate in an additional eight.

The deal is being funding by new bank facilities of up £110m and a minimum £110m equity raise, comprising of consideration shares of up to £18.85m, a subscription for Pirtek employees of around £4.8m, and a placing to raise at least £90m.

Shares will be issued at 180p, a 27% discount to Monday's closing price. As at 1000 BST shares in Franchise Brands had fallen 23% at 185p.

Stephen Hemsley, executive chair, said: "Building on the strong performance of the group's acquisition of Filta, which brought an international footprint in North America and Europe, Pirtek Europe extends the group's European presence across several key countries, providing a platform from which to launch the group's existing brands.

"By expanding the group's operations to ten countries, the acquisition will significantly advance the board's aim to create a market leading international business to business multi brand franchisor that generates income equally from the UK, North America and continental Europe."

Franchise Brands agreed to acquire Filta Group, the owner of franchises including Metro Rod, Willow Pumps and Ovenclean, in an all-share offer valued at £49.8m last March.

The Pirtek deal was first announced by Franchise Brands after markets closed on Monday.