Acquisition of DL Radiators srl

RNS Number : 8737P

Stelrad Group PLC

23 June 2022

 

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

23 June 2022

STELRAD GROUP PLC

("Stelrad" or "the Group")

Acquisition of DL Radiators srl

Stelrad to acquire DL Radiators, expanding product range and geographical presence

Stelrad, a leading specialist manufacturer and distributor of radiators in the UK, Europe and Turkey, today announces it has entered into an agreement with De Longhi Industrial S.A to acquire 100% of the share capital of DL Radiators srl (" DL Radiators ") for €28.346 million on a debt free, cash free basis. DL Radiators is a leading Italian heat emitter manufacturer which produces and sells both hydronic and electric radiators into the domestic heating market.

DL Radiators' main manufacturing site is located in Moimacco, near Udine, Italy and employs approximately 350 people. Its product range includes steel panel, multicolumn steel, aluminium and towel warmer radiators, providing customers with flexible heat emitter solutions suitable for a wide variety of installations.

Stelrad's acquisition of DL Radiators extends the range of radiators available to its existing sales and distribution network, expands its routes to market, provides a well established complementary brand and increases its manufacturing capacity. These criteria are aligned with the acquisition policy and strategy stated at the time of the Group's admission to the London Stock Exchange in 2021.

DL Radiators generated €86.9 million revenue and €5.0 million normalised EBITDA for its financial year ended December 2021¹, with gross assets at 31 December 2021 of €62.9 million.

Upon closing, Stelrad will pay a cash consideration of 28.346 million based on a debt free, cash free enterprise value of six times normalised EBITDA. The transaction will be funded from existing facilities including temporary use of a £20 million accordion option. Leverage is expected to return to comfortably below 1.5x EBITDA by the year end. The Group expects the acquisition to be earnings enhancing in the current financial year with double digit EPS enhancement in future years.

DL Radiators' experienced management team, led by CEO Stefano Valente, will continue to run the business with oversight from Stelrad, and the transaction is anticipated to close in the coming weeks, following satisfaction of conditions precedent. The Group intends to provide further detail on DL Radiators at the Group's interim results on 12 August 2022.

¹ Reported EBITDA per the 2021 financial statements was €5.071 million

Trevor Harvey, CEO of Stelrad, said:

"This is a compelling transaction for Stelrad and allows us to grow our business through the provision of additional products and through geographical expansion. DL Radiators has strong brands with a significant customer base and we look forward to working with the team to realise value opportunities and expand the market for their higher value product ranges.

"Following completion of this transaction, Stelrad will be a market leader in six countries and hold a top 3 position in five more. We will continue to develop our mainland European relationships with the long-established regional distribution players in those territories, ensuring we continue to adapt to evolving routes to market."

Stefano Valente, CEO of DL Radiators, added:

"We firmly believe that the success of a company is built on the commitment of people who are passionate about their work and who can open up to the world and creatively contribute to its improvement. We see this as a shared value with Stelrad's experienced team from the management through to sales and operations and we are excited to work alongside them to grow DL Radiators as a leading heat emitter manufacturer.

"The mission of DL Radiators is the creation of heating products fit for the future, which are able to improve not only the comfort of the rooms but the quality of everyday life, combining intuitive technological capabilities with Italian attention to design. Our partnership with Stelrad allows us to continue to fulfil this mission to provide a best-in-class offering."

The acquisition constitutes a class 2 transaction, and this announcement has been made pursuant of Chapter 10 of the UK Financial Conduct Authority's Listing Rules.

- Ends -

ENQUIRIES

Stelrad Radiator Group Trevor Harvey, Chief Executive Officer George Letham, Chief Financial Officer	[phone]
Investec Bank plc (Sole Corporate Broker) Bruce Garrow Ben Griffiths	[phone]
Powerscourt (Media Relations) James White Genevieve Ryan	[phone] [e-mail]

Notes to Editors

About Stelrad

Stelrad Group plc is a leading specialist manufacturer and distributor of steel panel radiators in the UK, Europe and Turkey, selling an extensive range of standard and premium steel panel radiators, low surface temperature (LST) radiators, towel warmers, decorative steel tubular radiators and other steel "column" radiators to more than 500 customers annually.

The Group has four core brands: Stelrad, Henrad, Hudevad and Termo Teknik, which had approximately 16.6 per cent. share by volume of total markets in the UK, Europe, and Turkey in 2020, including 50.2 per cent. market share in the UK. In 2020, the Group held top 3 share positions in 11 countries and was #1 in the UK, Ireland, the Netherlands, Belgium and Denmark.

It is headquartered in Newcastle upon Tyne in the United Kingdom with manufacturing and distribution facilities at Mexborough in the UK, Nuth in the Netherlands and Çorlu in Turkey, employing 1,326 employees across the business, during 2021.

The origins of the Group date back to the 1930s and, today, Stelrad enjoys long established commercial relationships with many of its customers, having served each of its top five customers for over twenty years.

Further information can be found at: https://stelradplc.com/

About DL Radiators

DL Radiators is a company of the De Longhi Industrial group known worldwide as a leading Italian manufacturer of heating and home comfort products.

Passionate high-level professionalism, investments, organisational skills, advanced technologies, Italian creativity and a focus on market expectations are all constituent elements of DL Radiators' thirty-year experience for the manufacturing of leading-edge products.

Faithful to its mission of favouring innovation, DL Radiators offers radiators that combine functionality and aesthetics for designer radiator consumers, installers and architects.

Further information can be found at: http://www.dlradiators.com/dlradiators/en/

 

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