Mon, 29 Mar 2021 | BUSINESS SALE
Cleaning and decontamination firm REACT Group has made its first acquisition with the takeover of commercial cleaning company Fidelis Contract Services in a deal that could rise to £4.75 million. The total consideration will be based on a 4.75x multiple of Fidelis’ EBITDA for the financial year ending March 31 2022.
The acquisition will proceed for an initial £1.7 million consideration, of which £1.5 million is payable in cash with £200,000 coming through the issuing of new ordinary shares. A further £3.05 million in deferred payments is subject to Fidelis’ upcoming financial performance in the current trading year.
The deferred consideration will be paid in cash instalments ending March 29 2024. Regarding the structure of the deal, REACT Executive Chairman Mark Braund said: "We have structured the acquisition such that the deferred consideration is linked to the EBITDA performance of Fidelis. We therefore intend to fund any further consideration payable from a combination of existing resources and cash generated by the enlarged REACT group post acquisition.”
Fidelis, which provides a range of specialist cleaning services for clients in a wide array of sectors, is the first acquisition in REACT’s growth strategy, through which it is aiming to build a leading market position via both organic growth and strategic acquisitions.
REACT says the acquisition will be immediately earnings enhancing and will drive a significant increase in the scale of its services. Founded ten years ago, Fidelis is a strong performer in the cleaning and hygiene sectors, generating 87 per cent recurring revenue for the financial year ended March 31 2020.
Commenting on the deal, Mark Braund said: "We are delighted to announce the acquisition of Fidelis today, our maiden acquisition and an important milestone in our stated goal to become the country's most trusted name in the provision of specialist cleaning, decontamination and hygiene services. The acquisition is expected to be immediately earnings enhancing and leaves REACT well positioned to continue to increase market share.”
"The combination of our recent organic growth and the Fidelis acquisition leaves us well positioned to deliver material growth in the current financial year," Braund added.
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