Polypipe Acquisition of Nuaire

RNS Number : 1114V
Polypipe Group PLC
05 August 2015

5 August 2015


Polypipe Acquisition of Nuaire


Polypipe Group plc (“Polypipe” or the “Company”) announces today that it has entered into an agreement to acquire Nu-Oval Acquisitions 1 Limited (“Nuaire”) from Electra Partners and other existing Nuaire shareholders (collectively, the “Sellers”) for a cash consideration of £145 million on a debt and cash-free basis (the “Acquisition”). The Acquisition will be financed using a combination of existing cash from the balance sheet and new debt and is expected to complete by the end of August.


Key highlights

·    Acquisition of a leading provider of ventilation solutions in the UK and internationally, with a solid track record of growth, profitability and successful cash flow generation

·    Broadens Polypipe’s product offering in the high-growth ventilation sector, and particularly the commercial ventilation segment, and provides further market reach towards end-users through a specification-led business model

·    Accelerates the delivery of Polypipe’s strategic vision especially in the area of Carbon Efficient Solutions driven by legislation change

·    Consideration of £145 million on a cash and debt-free basis, equivalent to 11.4x LTM EBITDA as at end-June 2015 based on unaudited management accounts

·    Double-digit EPS accretion expected in the first full financial year of ownership


Commenting on the Acquisition, David Hall, Polypipe Chief Executive, said:

“We have long been an admirer of Nuaire and this acquisition provides a perfect fit for us. Nuaire expands considerably our product platform and market reach within the growing ventilation sector, which, like other parts of our business, are being positively impacted by environmental legislative change. Nuaire will continue to operate as an independent division, as we leverage the capabilities of the combined group to drive growth, bringing more choice to our broader customer base. We are delighted to welcome Nuaire’s management and staff as we look forward to accelerating the strategic development of the enlarged group.”


Mark Huxtable, Chief Executive of Nuaire, said:

“We are delighted to be joining Polypipe. The companies share many characteristics, including a similar culture and philosophy, and together we will be better placed to tap into the excellent prospects for the sector.”


The Nuaire business

Nuaire is a market leading designer, manufacturer and distributor of ventilation systems to the UK commercial, residential and international ventilation markets. The company has a solid track record of growth, profitability and successful cash flow generation.

Nuaire is based in Caerphilly, Wales, from where it serves a diverse customer base of more than 5,000 customers in the UK and internationally. In the UK, the company’s customers are mostly contractors and building consultants. The company has a team 57 sales representatives focusing primarily on contractors and building consultants.

Nuaire has approximately 450 full-time employees.


Acquisition rationale

The Acquisition is in line with Polypipe’s strategy to broaden its market reach in high-growth products which benefit from environmental legislation aimed at reducing the UK’s carbon emissions. Nuaire is well-positioned to capitalise on the high growing UK ventilation market, which is forecast to outstrip UK construction market growth. Polypipe has targeted ventilation for some time, having built a solid understanding of the sector from its portfolio of ducting systems. Nuaire will complement this understanding through its in-depth knowledge and experience of mechanical ventilation.   

The market positions of Polypipe and Nuaire are highly complementary with little product overlap. Nuaire provides a market leading position in the UK commercial ventilation sector where Polypipe is not present. The Company’s management expects that Polypipe and Nuaire will be able to leverage their respective technical, selling and distribution capabilities and expertise to accelerate the combined company’s growth. There are considerable opportunities for product synergies such as broader combined product offers in, for example, controls, ducting and accessories.

It is anticipated that the senior management of Nuaire will remain with the combined business.


Terms of the transaction

Under the terms of the Sale and Purchase Agreement between Polypipe and the Sellers, Polypipe will purchase the entire issued share capital of Nuaire for a purchase price equivalent to £145 million on a debt and cash free basis, payable in cash upon closing of the Acquisition. The enterprise value is equivalent to 11.4x LTM EBITDA and 12.1x LTM EBITA as at end June 2015, based on unaudited management accounts. The consideration will be funded by a combination of existing cash from balance sheet and new debt.

The Company expects the Acquisition to result in double-digit accretion to earnings per share in the first full year of ownership and contribute meaningfully to the Company’s growth profile going forward. Polypipe plans to maintain its current 40% dividend payout policy post the Acquisition. This statement is not meant or intended to be a profit forecast, and should not be interpreted to mean that the earnings per share of Polypipe following completion of the Acquisition will necessarily be above or below the historical published earnings per share.

In connection with the Acquisition, Polypipe’s existing £120 million term loan will be fully repaid, and its existing revolving credit facility of £40 million will be expanded to £300 million. The Company believes that this structure will provide Polypipe with significant flexibility.

It is anticipated that the Acquisition will complete by the end of August


Background on Nuaire

Nuaire is a UK-based designer, manufacturer and distributor of ventilation systems to the UK commercial, UK residential and international ventilation markets. Nuaire is estimated to have a market leading position within the UK commercial ventilation market and is well-regarded for its ability to drive specification led sales amongst Consulting Engineers in particular for the design and manufacture of innovative solutions.

Nuaire has three business segments:

·    The commercial segment (56% of LTM revenue), in which Nuaire is estimated to hold a market leading position, includes ventilation systems (with or without heat recovery) and energy efficient solutions for new build and refurbishments in both the private and public sectors in the UK. End users include offices, schools, hospitals, hotels, retail and leisure outlets, and car parks.


·    The residential segment (28% of LTM revenue) services both private and public sectors across the UK. End users include housing associations, local authorities, national, regional and local housebuilders as well as self-builders. Products within this segment are increasingly sophisticated ventilation systems and unitary fans for both new build and RMI applications.


·    The international segment (16% of LTM revenue) includes certified high temperature axial fans and selected products from Nuaire Commercial and Residential product portfolios sold via third party distributors to the Middle East and mainland Europe, as well as low temperature axial fans distributed directly to customers mostly in Northern Europe.

Based on unaudited management accounts, for the twelve months ending in June 2015 Nuaire has generated sales of £63.5 million (up 18.8% vs the same period last year) and EBITDA of £12.8 million (up 29.4% vs the same period last year). Revenue growth has been driven by new and updated products, and strong underlying demand due to the tightening of UK and European building regulation. Revenues for the nine months ended 30 June 2015 increased by approximately 19% compared to the same period in the prior year Margins have continued to improve as Nuaire benefits from the introduction of new product ranges and due to shift towards more complex solutions. EBITDA margin for the nine months ended 30 June 2015 is approximately 20%, and expected to remain broadly at that level going forward. In the twelve months ended September 2014, Nuaire generated EBITDA of £9.7 million on revenues of £56.3 million, significantly outgrowing its addressable market. During the same period, cash flow from operating activities reached £9.9 million.

As at 30 September 2014, Nuaire had gross assets amounting to £69.9 million.


Polypipe current trading

Our strategic growth initiatives are delivering on plan in a continued positive market environment in our main UK market, which means we remain confident that the Company will deliver results for the year in line with board expectations. Polypipe will report its interim results for the six months ending 30 June 2015 on 20 August 2015.


Conference call for analysts and investors

Polypipe will hold a conference call and webex presentation for investors and analysts at 9am. The dial-in details and webex URL are below:

Participant dial in:           01452 555566
Conference ID:                 3994276

Webex URL:              

The presentation to accompany this call is available on the Reports, results and presentations page on Polypipe’s website at



David Hall, Chief Executive Officer
Peter Shepherd, Chief Financial Officer
+44 (0) 1709 770 000

Moelis & Company (Financial Adviser)
Mark Aedy
Liam Beere
+44 (0) 20 7634 3542

Brunswick (Investor Relations)
Mike Smith
Azadeh Varzi
Nina Coad
+44 (0) 20 7404 5959

Deutsche Bank (Joint Corporate Broker)
Charles Wilkinson
Adam Miller
+44 (0) 20 7545 8000

Numis (Joint Corporate Broker)
Richard Thomas
Ben Stoop
+44 (0) 20 7260 1000



This announcement includes certain forward-looking statements which are based on Polypipe’s or, as appropriate, its directors’ current expectations and projections about future events. These forward-looking statements speak only as of the date of this announcement and are subject to risks, uncertainties and assumptions about Polypipe, the Group and Nuaire. The events or circumstances referred to in the forward-looking statements may differ materially from those indicated in these statements, and you should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. Nothing in this announcement should be taken as a forecast, estimate or projection of the future financial performance of Polypipe, the Group or Nuaire. No undertaking is given to publicly update or revise any such forward-looking statement, whether as a result of new information, future events or otherwise.

Moelis & Company UK LLP (“Moelis & Company“) is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Deutsche Bank AG (“Deutsche Bank“) is authorised under German Banking Law (competent authority: European Central bank) and, in the United Kingdom, by the Prudential Regulation Authority. It is subject to supervision by the European Central Bank and by BaFin, Germany’s Federal Financial Supervisory Authority, and is subject to limited regulation in the United Kingdom by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of its authorisation and regulation by the Financial Conduct Authority are available on request.  Numis Securities Limited (“Numis“) is authorised and regulated in the United Kingdom by the Financial Conduct Authority.  Each of Moelis & Company, Deutsche Bank and Numis is acting solely for the Company and no one else in connection with the Acquisition and they will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for providing advice in relation to the Acquisition and/or any other matter referred to in this Announcement.  Apart from the responsibilities and liabilities, if any, which may be imposed on the Company, Moelis & Company, Deutsche Bank and/or Numis by the Financial Services and Markets Act 2000 or by the regulatory regime established under it, none of the Company, Moelis & Company, Deutsche Bank and Numis nor any of their respective affiliates accepts any responsibility whatsoever for the contents of the information contained in this Announcement or for any other statement made or purported to be made by or on behalf of the Company, Moelis & Company, Deutsche Bank and/or Numis or any of their respective affiliates in connection with the Company or the Acquisition. 

The Company, Moelis & Company, Deutsche Bank and Numis and each of their respective affiliates disclaim all and any liability, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this Announcement and no representation or warranty, express or implied, is made by the Company, Moelis & Company, Deutsche Bank or Numis or any of their respective affiliates as to the accuracy, completeness or sufficiency of the information contained in this Announcement.



Polypipe is the largest manufacturer in the UK, and among the ten largest manufacturers in Europe, of plastic pipe systems for the residential, commercial, civils and infrastructure sectors by revenue. The Company operates from 16 facilities in total, and with over 20,000 product lines, manufactures the UK’s widest range of plastic piping systems within its target markets. The Company primarily targets the UK, French and Irish building and construction markets with a presence in Italy and the Middle East and sales to specific niches in the rest of the world.


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The company news service from the London Stock Exchange




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