John Menzies plc Acquisition of Orbital Marketing Services
John Menzies plc is pleased to announce that it has reached agreement for Menzies Distribution, its newspaper and magazine wholesaling subsidiary, to acquire the entire issued share capital of Orbital Marketing Services Group Limited (Orbital). Orbital is 51% owned by BP Direct Mail Company Limited and 49% by Rydlings Limited, whose shareholders comprise the existing management team who will remain with the business.
Orbital comprises a portfolio of UK based logistics and marketing services businesses serving the travel, tourism, education, charity, publishing and healthcare sectors. The company was established in 1972 and it employs over 550 staff at 9 locations across the UK.
For the year to March 2012 Orbital reported an operating profit of £2.2m and gross assets of £13.5m. Like Menzies Distribution, Orbital is a cash generative business and the acquisition will be earnings enhancing in the year to 31 December 2013.
Total consideration for Orbital, which will be met in cash from existing banking facilities, amounts to £13.6m with £7.7m payable now and a further £5.9m payable on 31 December 2014. Further consideration, up to a maximum of £6.3m may be payable only if exceptionally high levels of profit performance were to be achieved by December 2014.
The acquisition of Orbital takes Menzies Distribution into new business sectors and adds further complementary services to its existing logistics and marketing services capabilities. The acquisition is highly synergistic. Given the respective infrastructure of both businesses there are significant network, operational and system synergies to be gained as part of the integration process in the medium term.
Iain Napier, Chairman of John Menzies plc, said:
"I am delighted that Menzies Distribution has acquired Orbital. This acquisition allows us to expand our printed media distribution footprint whilst also taking a large stride into adjacent growth areas. The team are now focussed on integrating these new businesses and driving through the significant synergies that have been identified.
Orbital opens up new opportunities for us. The combined network will bring new reach to our logistical capabilities and allow us to expand some of Orbital's services into new areas.
It has been our strategy to invest within both operating divisions where sustainable earnings can be created. While the majority of the Group's expansion will continue to come from our industry leading Aviation services business, this acquisition allows Menzies Distribution to grow by enlarging its printed media distribution capabilities and opening up new markets with strong growth opportunities."