Topps Tiles Plc has today announced the acquisition of 80% of the issued share capital of Strata Tiles Ltd. Strata is a supplier of tiles to the commercial market.
The acquisition also involves the grant of put and call options relating to the purchase by the Group of the remaining 20% of the issued shares in Strata, which are exercisable in 2021.
Strata is a recognised and respected brand in commercial tile supply. With offices in Guildford and a showroom in Bermondsey, Strata is located close to its customer base within the architecture and design community. It is a leading supplier of quality porcelain, polished concrete, mosaics, natural stone and technical stone tiles for commercial design projects. Key market segments include transport, retail, building cladding projects, university buildings and residential apartment blocks.
Established in 2002 by the vendors, Jonathan Wiles and Paul Wallis, who will remain with the business, Strata will be integrated into Topps’ Commercial business unit, established following the acquisition of Parkside Tiles in August 2017. The Strata brand will be retained.
The acquisition of Strata will add additional scale to the Group’s fast-growing commercial business as it seeks to build a leading position in the commercial tile market. Strata is expected to benefit from the Group’s competitive advantage as the UK’s leading tile specialist, particularly its product range and buying scale.
In the financial year ended March 2018 Strata reported turnover of £4.8m and profit before tax of £0.7m (unadjusted). The value of the gross assets that are the subject of the transaction is £1.5m. Consideration for the acquisition will be financed from the Group’s existing bank facilities. The consideration will be paid in cash, with £3.3m (plus a £0.4m closing adjustment) being paid on completion of the initial acquisition of 80% of the issued share capital. Up to a further £2m will be paid on completion of the acquisition of the remaining 20% of the issued share capital, being subject to performance targets over a two-year period. Post the payment of the initial cash consideration, the net debt position of the Group will be approximately £22m. The Board expects the acquisition of Strata to be accretive to earnings in the current year and beyond.
Matthew Williams, Chief Executive Officer of Topps, says: “Our commercial business is already expanding at pace, with sales in the first half growing by around three times year-on-year. The acquisition of Strata will accelerate this expansion and demonstrates our commitment to building a commercial business of quality and scale. Strata is a well-regarded and well-run business with a strong brand; and we look forward to welcoming the Strata team into the Topps Group.”