16th January 2012
ADG acquires UK based procurement business
Today, ADG announced the acquisition of Winchester Procurement Pty Ltd, a privately held, UK based procurement and supply business.
The acquisition will extend ADG’s customer base, significantly lift its supplier reach and provide increased buying power for the Group.
Winchester Procurement was established in 1990 by the founding owners, whose services have been retained. Turnover and adjusted normalised EBIT for the year ended 31 December 2011 were approximately £6m and £0.4m respectively (unaudited). Winchester services clients in a number of regions with approximately 60% of sales into Africa.
The terms of the acquisition are as follows:
- Acquisition of 100% of the shares in Winchester Procurement Pty Ltd;
- Purchase price of £1.125m based on Net Tangible Assets of £1.160m as at 31 December 2011 (unaudited);
- No goodwill;
- £350k paid on settlement (13th January 2012). This has been funded by ADG working capital;
- Balance due on 3rd January 2013. A portion of the delayed consideration is subject to performance targets being met by the Winchester founders;
- 2,000,000 shares issued to founder Mr George Rodger under the ADG Employee Share program on a deferred loan (issued at 7 cents, subject to 2 years escrow and conditional to 2 years employment continuation);
- Mr George Rodger remains a director of Winchester Procurement; and
- Acquisition to benefit ADG revenue and earnings in the second half of current financial year.
The acquisition comes four months after ADG announced the establishment of its London based office and distribution facility as part of an expansion into Europe to better service a growing client base in Africa.
John Mancini, Managing Director of ADG Global Supply said the acquisition substantially lifts the company’s global procurement and supply capabilities out of the Europe region and is a natural fit for ADG.
"With the addition of Winchester Procurement, ADG expects a significant uplift to our European operations in terms of a considerably expanded supplier base, new customer and revenue streams.
“The acquisition also increases our people and operational capability to quickly advance ADG’s plans to service clients across Africa.
“The Winchester brand will remain and ADG will extend its project logistics, industrial products and other services to Winchester customers. As we integrate various back end functions into ADG’s operations we anticipate cost savings and margin improvements for both businesses.
“We have retained the founders of Winchester Procurement, including George Rodger, who will add new skills and expertise to the Group. We will also benefit from the additional resources of the current team who will continue to operate from their headquarters in Winchester, Hampshire.
“This strategic move not only strengthens our position to service our key region of Africa, it also expands our global footprint – one of our key initiatives to drive revenue growth and margin uplift,” Mr Mancini said.
About Winchester Procurement
Winchester Procurement was founded in 1990 and is a leading UK procurement and supply business with clients predominantly across Africa, and also the Middle East and the Caribbean. They service a variety of industries including mining, construction and NGO’s (non-governmental organisations including the UN). For the period January to December 2011, Winchester Procurement generated £6.2m (GBP) in revenue.
Download the ASX Announcement here