I rather like the acquisition of Lighthouse Holdings by Portmeirion announced today, Lighthouse own Wax Lyrical Ltd the UK's largest manufacturer of home fragrances. They produce such items as reed diffusers and scented candles and there seems to be good demand from the public for such items with every supermarket stocking various varieties of each. Amusingly I first came across reed diffusers a few years back whilst staying in a rather nice Hong Kong hotel. I was washing my hands in the plush bathroom and thought I would try this “rather nice oriental handwash in a bottle containing sticks for application to ones hands”; enough said!
The £18m acquisition won’t in my view have any real impact in terms of carrying debt as the £18m consideration has been funded from cash reserves and debt draw down on new banking facilities comprising a £10 million loan facility, a £10 million revolving credit facility and a £2 million overdraft facility from Lloyds. Previous to this acquisition Portmeirion had no debt; a market cap of £127.6m and an enterprise value of £116.5m so no worries at all there.
Lighthouse looks a solid business these days and the accounts for the year ended 31 December 2015 recorded revenue of £13.8 million, a pre-tax profit of £2.1 million and net assets as at 31 December 2015 of £7.6 million. That’s a very decent operating margin of 15% which bolts nicely onto the latest declared operating margin for Portmeirion on 12.5%. Incidentally Portmeirion have grown this margin year on year over the last six years.
I particularly like the comments in the RNS:
The Acquisition brings the following strategic benefits for Portmeirion:
It’s also good to read that Joanne Barber, the current Managing Director of Wax Lyrical, will continue to run the business: always good to see continuity.
I did blog a note on the 17th April regarding my top up of my Portmeirion holding and all in all I am a happy holder. It appears that Mr Market is fairly happy today with the news as the share price has nudged up a modest but pleasing 3%.
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