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Torex has acquired the Retail Division (RBS) of Sanderson Group for £11.75m (£11.5m cash on completion) RBS had sales of £12.36m, operating profits of £1.42m and PBT of £860K in the year to 30th Sept 11. RBS specialises in the sale of epos solutions to high street retailers with 25 UK retailers like Wilkinson, Selfridges, Hamleys, Fenwick and French Connection cited as clients.
This is a deal which seems to make sense for both parties.
Torex has really been given a new lease of life since Steve Rowley was appointed CEO in 2009. See my post Torex adapts to new retail landscape. They have revenues of £135m in the retail, hospitality, convenience and fuel markets. So the RBS acquisition is the right size (which we like), fits well and brings 25 new customers who can be sold Torex’s other products and services. Indeed, not impossible to see RBS doubling in the next few years under Torex – something that would have been difficult in Sanderson. The consideration of c1x revenues looks about right. It’s also a great vote of confidence from Torex’s PE owners in Steve Rowley.
For Sanderson, the proceeds will eliminate debt – indeed they will have £4m cash in the bank. Refinancing its debt had been a long running issue at Sanderson, particularly since its ‘very tough period of 2008 – 2009’. This issue seemed to have been solved last August – see Sanderson refinances. Sanderson can now concentrate on its multi-channel retail and manufacturing activities with ‘complementary acquisitions’ . In those areas, Sanderson reports that order intake in the quarter to 31st Dec 11 was c10% ahead of the same period in 2010. Sanderson is also promising to ‘accelerate the progressive dividend policy’.
It will be interesting to see how the Sanderson share price reacts. I have always declared that I have been a Sanderson shareholder since its 2004 IPO at 50p. It is not now impossible to dream that I might get my money back.
Footnote at 8.50am - Sanderson shares have opened up 20% at 34.5p.
