IG Design Group plc, a leading designer, innovator and manufacturer of celebration, gifting, stationery and creative play products, is pleased to announce that its wholly-owned subsidiary, IG Design Group Americas, Inc. (IGA) has entered into a conditional agreement to acquire 100 percent of the equity interest in Impact Innovations, Inc. (II), a leading supplier of gift packaging and seasonal décor products in the US, for £56.5 million on a cash and debt free basis representing a 4.9x Underlying EBITDA multiple with an additional working capital and other adjustment.
In conjunction with the acquisition, IGA is pleased to announce a placing with institutional investors to raise up to £50 million before expenses (the “Placing”) through the issuance of up to 9,804,000 new ordinary shares of 5 pence each in the capital of the company at 510 pence per share. The placing of shares was significantly oversubscribed, with strong support from both new and existing institutional shareholders.
Of the total value of the placing, approximately £31.9 million shall be used to satisfy the funding of the acquisition and is not subject to shareholder approval. Accordingly, application has been made for 6,260,000 new ordinary shares of 5 pence each in the capital of the Company (“First Tranche Placing Shares”) to be admitted to trading on AIM. The issuance of the remaining 3,544,000 shares is subject to shareholder approval at the AGM and it is expected that admission will occur on 19 September 2018.
Completion of the acquisition is conditional on the successful admission of the First Tranche Placing Shares and is expected to occur on or around 31 August 2018.
Acquisition Highlights For the year ended 31 December 2017, II recorded Underlying EBITDA* of US$15.0 million on revenues of US$155.9 million and the directors of Design Group believe that the acquisition will create the world’s largest consumer gift packaging business, deliver significant earnings accretion in each of the next three financial years, deliver annual synergies in excess of US$5.0 million by year three, enable expansion into the growing and adjacent seasonal décor product category both in North America and in established Design Group markets around the world.
It also brings a complementary yet distinct customer base, and long-term relationships with major blue chip US retailers.
Paul Fineman, Chief Executive Officer of Design Group, commented: “The combination of Impact Innovations with Design Group not only doubles the scale of our business in the Americas, it further enhances the overall performance and growth potential of our whole Group whilst continuing to illustrate our delivery of the Group’s stated strategy.
“We are delighted to be acquiring a business that has a strong track record of consistent robust financial performance and cash generation through providing great product and category management expertise to its customers. As a combined Group, we have a significant opportunity to capitalise on our now enlarged scale and breadth of offering to our customer base of many of the world’s largest and most successful retailers.
“Together, we will enhance our scope for future development, both organically and through carefully considered acquisitions, building on the strong foundations that have been laid and taking Design Group to its next exciting level of growth.”
John Dammermann, Chief Executive Officer of Impact Innovations, commented: “I, along with our team at Impact Innovations am very excited to be joining Design Group, a business with an impressive track record and great momentum. Together we have even greater opportunity for future growth and I look forward to continuing to play a key role in delivering ongoing success within the Americas and throughout the overall Group.”
