Johnson Service Group buys Ireland-based Celtic Linen

1st Sep 2023 09:30

(Sharecast News) - Johnson Service Group announced the acquisition on Friday of Harkglade and its subsidiaries, Celtic Linen and Millbrook Linen, collectively known as Celtic Linen.

The AIM-traded firm said the acquisition was finalised on 31 August for cash consideration of €31.5m (£27.1m) on a debt-free, cash-free basis.

It described Celtic Linen as a leading supplier of textiles in the Republic of Ireland, primarily servicing the healthcare and the hotel, restaurant, and catering (HoReCa) sectors.

Johnson Service Group said the deal was structured subject to a locked-box mechanism, and a normalised level of working capital.

The €31.5m acquisition price included €3.6m for two freehold facilities that were currently in use by Celtic Linen.

It said the acquisition was expected to be immediately accretive to earnings, adding that it aligned with its stated strategy of seeking value-enhancing acquisitions to broaden its market reach.

Celtic Linen reported revenue of €29m for the financial year ended 1 January.

The company is the largest linen supplier to the Republic of Ireland's healthcare sector, and ranked as the second-largest supplier to the HoReCa sector.

More than 50% of its revenue came from healthcare, signalling a strategic diversification for Johnson's customer base.

As part of the acquisition terms, the existing management team at Celtic Linen would continue to lead the business, in a bid to provide stability and facilitate seamless integration into Johnson Service Group's operations.

"We are delighted to have completed the acquisition of Celtic Linen, which represents a further significant step in our strategy to expand the range and scale of services we offer," said chief executive officer Peter Egan.

"I have known Celtic Linen for many years and have been very impressed with the quality of the business, its reputation for excellent customer service and the growth it has achieved in recent years.

"The existing senior management team will remain with the business with Joanne Somers, managing director of Celtic Linen, reporting directly to myself."

At 0942 BST, shares in Johnson Service Group were up 2.55% at 121.83p.

Reporting by Josh White for Sharecast.com.