UK
Johnson Service Group (JSG) has acquired the entire shareholding of Portgrade together with its trading subsidiary Afonwen Laundry for £52.6million in cash. It has also purchased Chester Laundry, trading as Chester Textile Services, for £3.3m.
Afonwen is one of the largest privately owned hotel linen rental operators, supplying more than 280 customers and servicing 65,000 bedrooms across England and Wales. It employs more than 750 staff and has a fleet of 80 commercial vehicles. Established in 1935, Afonwen operates from three laundry facilities in Pwllheli, Reading and Cardiff and a distribution depot in Leeds.
JSG told investors that the Afonwen acquisition has been funded from the group's existing bank facility. In addition, the group has outlined plans to place 33.1 million shares at 90p each with existing institutional investors, raising net proceeds of £28.7m. The shares, when issued, will represent approximately 10% of the company's existing share capital.
The acquisition of Portgrade and the placing are not inter-conditional.
Portgrade's consolidated revenues for the year ending 31 August 2015 were £38.4m. Its adjusted earnings before interest, taxes, depreciation and amortisation were £6.4m, and its adjusted profits before tax were £3.3m.
Meanwhile, Chester Textile Services was established in 1885 and services the high-volume hotel linen market from its freehold laundry in Chester. It employs approximately 130 staff and has a fleet of 14 commercial vehicles.
Chester's revenues for the year ending 31 December 2015 were £7.1m after adjusting for the loss of revenues of £1.2m within 2015 as a result of the termination of a supply partnership contract.
Investec Bank is acting as nominated adviser, financial adviser and sole bookrunner in respect of the placing.
"I am very pleased to announce further acquisitions that increase our presence in the textile rental market and the addition of Afonwen significantly strengthens our quality and service offering within the high-volume hotel linen sector," said Chris Sander, chief executive of JSG. "I have known Afonwen for many years and have been very impressed with the quality of its business, the investment in additional laundry facilities and the resultant growth achieved in recent years. Its operations complement our existing high-volume linen business in Bourne and Birmingham and will give us additional production facilities to serve our customers better and provide the opportunity for logistical efficiencies."
Mark Woolfenden, managing director of Afonwen, said: "We are delighted to be joining Johnson Service Group, a company which shares many of our values in delivering first-class customer service and high-quality linen products to the hospitality industry.
"With increasing consolidation in the UK textile rental market, the opportunity to scale up into a larger organisation and allow us to offer fully nationwide coverage was a huge attraction. We look forward to continued growth."
LINEN OPERATION: Afonwen's Reading facility
