Under the terms of the acquisition, Trifast has acquired Kuhlmann for a total consideration of €8.50 million (£6.16m). The initial amount of €6.76 million (£4.90m) was paid on completion in cash and €0.04 million (£0.03m) was satisfied by the allotment of 29,350 ordinary shares in the Company. Consideration of €1.70 million (£1.23m) will be deferred for 12 months and is to serve as a retention against which any potential warranty and indemnity claims will be offset. The cash consideration will be met from the Company’s existing bank facilities.
Trifast will be investing into Kuhlmann to further develop the opportunities in the German market and expects the acquisition of Kuhlmann to be earnings enhancing in the first full year of ownership.
Overview of Kuhlmann
Based in Verl, close to Bielefeld, Germany, Kuhlmann was founded in 1996 and employs 18 staff. It is a well-respected highly efficient distributor of industrial fastenings within the domestic German market. Its emphasis is on delivering high quality products and services to its well-established longstanding customer base in the principal sectors of machinery and plant engineering, sheet metal processing and industrial. Kuhlmann’s management team and previous owners, Frank Niggebrügge, Eric Hütter and Peter Henning will continue to run the business with the support of the operational management team and staff who will remain within the business.
For the year ended 31 December 2014, Kuhlmann reported revenue of €6.70 million (£4.86m) and profit before tax of €1.74 million (£1.26m). Gross assets at the same date were €1.43 million (£1.04m).
Background to and reasons for the Acquisition
Germany is the fourth largest industrial fastener market globally and the biggest in Europe. Over the last five years TR has successfully developed its export business and last year sales into Germany contributed around £7.00 million. To further enhance TR’s reputation and presence in this important market the Directors consider it strategically beneficial to establish a strong domestic distribution and logistics facility managed by local German speaking industrial fastener professionals.
Kuhlmann has a highly experienced and motivated team with excellent technical know-how and knowledge which will enable the Group to drive its core growth strategy of growing its multi-national OEM base.
Commenting on the German expansion, Malcolm Diamond MBE, Executive Chairman said: “As investors know, we have a strong philosophy when it comes to acquiring businesses - profitable businesses, in our key sectors, backed up by respected and experienced management. Kuhlmann provides just this and the base from which to grow our presence and sales into the largest manufacturing country in the EU region. Everyone at TR looks forward to working with the Kuhlmann team to achieve this objective.”
Trifast’s Chief Executive, Mark Belton added: "This is a very positive step for both TR and Kuhlmann and we welcome everyone into the Trifast family. Having already built a close trading relationship between our two businesses and respective management teams, we are now establishing a strong local presence and a base for what we see as an exciting opportunity for both TR and Kuhlmann. We are confident that combining local knowledge and culture with increased technical expertise, in what is the largest industrial market in Europe, will enable us to leverage the Group’s existing business and open up additional opportunities for further growth, both locally and internationally."
Frank Niggebrügge at Kuhlmann commented: “We have known the TR team for a number of years and we have mutual respect for each other’s business. The opportunity for Kuhlmann to become part of an international business opens up new markets and opportunities as well as us being able to benefit from the international manufacturing, sourcing and purchasing resources, and worldwide marketing capabilities that the Trifast Group has to offer. We look forward to working with the Trifast team and exchanging ideas and initiatives.”
Application will be made for admission of 29,350 new ordinary shares of 5p each in the Company to the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will become effective at 08:00 am on 7 October 2015.
Malcolm Diamond MBE, Executive Chairman
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