Deals
LiteBulb Group Limited Acquires Concept Merchandise Ltd
LiteBulb (AIM: LBB), the branded product developer, announces that it has entered into a conditional share purchase agreement to acquire the entire issued share capital of Concept Merchandise Limited ("Concept") (the "Acquisition").Concept has an excellent track record of earnings growth, is highly cash generative and debt free. It has been profitable for the last six years and recorded turnover of £7.5m and profits before tax of £1.1m for year ended 31 December 2013. Concept is expected to have a net asset position of over £3.8m on completion, mainly in liquid assets.
LiteBulb is acquiring Concept for an initial consideration of £5.0m, to be satisfied as to £4.75m in cash and £0.25m in ordinary shares. There is a further deferred consideration of up to £2.0m based on achieving various performance criteria, further details of which are set out below. The Acquisition is expected to enhance the Group's sales over the next 12 months and have a positive effect on earnings.
Concept operates in a new product category for Litebulb. Concept designs, develops and manufactures stationery and party products for the retail market and has been creating bespoke consumer products for some of the largest retailers in the UK for more than 24 years. Based in West Yorkshire, with a staff of 17, its customer base is tightly focused and almost solely UK based. It adds another product category to LiteBulb's offering and further extends the ability of the group to cross-sell throughout its extensive retail network, both at home and abroad. In addition, Concept has focused on designing its own ranges and, whilst proving highly successful, can benefit from the Group's brand relationships.
LiteBulb also announces that it intends to raise capital through the conditional issue of up to £3.5m of a new series of secured, convertible loan notes which may be converted into new Ordinary Shares at any time at a conversion price of 1p, a material premium to the current share price. Subscription letters for £3.5m have been received based on various conditions being fulfilled, as outlined below. The Board intends that the net proceeds of the subscription for the new loan notes will be used to partly fund the Acquisition.
The Board is pleased with current trading, with sales and committed orders as at 31 October 2014 now standing at over £20m for the financial year with two important trading months still to go. Individual group companies are performing well, with the earliest acquisition Bluw expected to show like-for-like sales growth of over 35% for the full year. This is a good indicator that the Group strategy is beginning to bear fruit.
Completion of the Acquisition and the issue of the Loan Notes is conditional on, amongst other things, approval by the Company's shareholders of the resolutions to be proposed at the Extraordinary General Meeting of the Company to be held at the offices of Fladgate LLP at 16 Great Queen Street, London WC2B 5DG at 10.00 a.m. on 10 December 2014.
The Directors recommend that shareholders vote in favour of the Resolutions, as they intend to do so in respect of their aggregate holding of 332,135,039 Ordinary Shares, representing c. 13.1% of the Company. The Circular will be made available on the Company website: www.litebulbgroup.com
Simon McGivern, CEO of LiteBulb, commented:
"I am delighted to welcome another cash generative, highly complementary business to the Group as we continue to deliver on our growth strategy. Concept's expertise in a new sector for us further extends our product offering and we see this as a great opportunity to cross-sell our products across a much wider range of retail relationships.
"Current trading within the Group remains strong, particularly in the build up to Christmas, and I am delighted that a number of Shareholders, both Institutional as well as High Net Worth Individuals, have again supported us through their participation in the Loan Notes subscription."
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