Here we feature the latest equity and acquisition news in Welsh business
Rhondda-based UPVC Direct has acquired family owned Principality Plastics Warehouse in a deal part-funded with a significant loan and equity investment by the Development Bank of Wales.
The deal, the value of which has not been disclosed, ensures the business remains in Wales.
Established in 1992 by John Peters, Principality Plastics Warehouse, which has annual sales of £9m, has warehouses in Cardiff, Gloucester and Swansea. It Supplies plastic building supplies to the trade and DIY markets. All 40 staff will be retained by UPVC Direct, the building and maintenance supply company established by entrepreneurs Paul Ragan and Matthew Epps in August 2021.
With an ambitious growth strategy focused on acquisition and customer integration, UPVC Direct will use some of the funding from the development bank to invest in an environmentally friendly range of products and upgrade technology to support business growth.
John Peters, founder of Principality said: “As a family, we’re so proud of our team for everything they have achieved. The time has come to retire safe in the knowledge that the UPVC Direct team will be a safe pair of hands to take over, particularly as they have similar values and a great reputation. I would like to sincerely thank all the staff at Principality, past and present, my previous business partners and my family for all their support and hard work over the years in making the company what it is today. I wish the team well and look forward to seeing what will be achieved moving forward.”
Mr Ragan, founder of Motaquote Insurance and managing director of UPVC Direct said: “I’m delighted with the acquisition of Principality Plastics Warehouse and grateful to our advisers and the development bank for working with us to provide the funding necessary to get the deal over the line and underpin the future growth of the business. Principality is a long-standing and very credible business with a loyal and ambitious workforce. We look forward to working with everyone involved at the company and continuing the great work of previous years.”
Deputy fund manager Jo Thomas worked on the deal with senior investment executives Navid Falatoori and Ruby Harcombe from the Development Bank. Ms Thomas said: “This has been a team effort and together we have focused on putting together a funding package with equity from our Wales management Succession Fund that is ideal for acquisitions and facilitating management succession.
The mix of debt and equity secures the future of Principality Plastics in Wales and provides additional headroom for growth.
“Like many family owned businesses, John wanted to manage his exit in a way that will protect both the legacy and the future of Principality. The business has an impressive track record but also opportunity for further expansion as part of the UPVC Direct Group given the product synergies and opportunities to cross-sell. With a highly credible and experienced management team, we have no doubt that there is a successful future ahead.”
Lewis Silkin and GS Verde advised UPVC Direct and Principality on the deal. Haines Watts and Geldards acted for the Development Bank of Wales.
Cansford Laboratories
Cardiff-based drug, alcohol and steroid testing company Cansford Laboratories has been acquired by Phenna Group.
Lexington Corporate Finance acted as the sole corporate finance advisor to the shareholders of Cansford on the 100% equity sale. The value of the deal has not been disclosed.
Cansford Laboratories was set up in 2010 with its founders having previously pioneered hair testing. Its methods are used by laboratories globally offering hair, oral fluid, nail, and dry blood spot testing with related services including collection and expert witness support.
John Wicks, chief executive of Cansford, said: “We are thrilled to be partnering with Phenna Group and I am convinced that They will provide exactly the support we need to help us deliver our exciting future growth plans. We have a great team culture and securing a partner that valued that was paramount in our decision making. I look forward to working with the Phenna Group team into the future.”
The team orchestrating the deal at Cardiff-based Lexington consisted of Thomas Edwards, Courtney Mattocks and Jade Burgess.
Director Mr Edwards said: “It came as no surprise to us that there was significant interest in Cansford from both trade and private equity buyers, considering the organisation’s impressive reputation as a leader in high quality drug, alcohol, and steroid testing.
“The business has scaled up considerably since its formation in 2010, thanks to the leadership of John Wicks and Lolita Tsanaclis, so it needed a buyer that matched this ambition. From working with Cansford it became clear that Phenna was the ideal fit.
“This transaction builds on Lexington’s strong credentials in the healthcare and testing, inspection, certification and compliance (TICC) sectors, increasing the total value of deals Lexington has advised on in 2023 to almost £150m.”
Phenna is a global provider (TICC) services and has made over 35 acquisitions since its inception in 2018. Its latest acquisition - the fifth so far this year - has been backed by Oakley, mid-market private equity fund with offices in London, Milan, Munich and Luxembourg. It invested in Phenna last November in a deal that valued Phenna at more than £1bn, and which provided an exit for Inflexion Private Equity.
Paul Barry, chief executive of Phenna Group said, “Cansford Laboratories is a business that we’ve admired for a while, and I’m absolutely delighted that John and Lolita have decided to partner with us. From our early engagements, it was very obvious our values and cultures aligned and that together, we could continue to build on their already impressive track record.
Emma Borrington, Owen James and Jacob Sims of Berry Smith provided legal advice to the shareholders.
Carreg
Haverfordwest-based Carreg Construction has been acquired by its employees. The company, which currently employs 21 people, has been sold by its founders Andrew and Sue Phillips.
The building firm, which was set up by in 2003, has worked on projects including the cloisters in St David’s Cathedral, Oriel Y Parc Gallery and Lexden House in Tenby.
Following more than 40 years in the building trade Mr Phillips will stay on as a company director, and continue to help grow and steer the business with the help of his fellow directors. An open sale was considered before revisiting pre-pandemic original plans for staff to acquired the firm via an employee ownership trust (EOT) . The value of the deal has not been disclosed.
Mr Phillips said: “We looked to put the business on the open market for sale, but it just didn’t feel right, so after discussing our plans further with colleagues in the industry - who explained that EOT wasn’t an overnight sale and that it could be done gradually - it became the perfect progression for us.
“We can keep the continuity and skills in the business, and I can eventually pass the business over fully to the EOT directors, once they have settled in. It really is the perfect succession solution for us.”
Along with Mr Phillips and fellow director Amy Morgan, Carreg’s newly appointed head of construction, Richard Leyshon, has been appointed as a director.
Sion Morgan will continue his role a non-executive director (NED) of the company and will be joined by new NED Peter Griffiths, former chief executive of Sainsbury’s Banking Group and Principality Building Society.
A new EOT board has been formed and will comprise of director Ms Morgan, site supervisor and carpenter Luke Roberts and independent trustee Andy Jones, the former chief executive of the Port of Milford Haven Port.
Carreg Construction director Ms Morgan said of the transition to an EOT: “We are really excited about becoming an EOT. The future is bright for Carreg. Having worked closely over the years with local company Melin Tregwynt who transitioned to an EOT 12 months ago, it gave us huge confidence that we could also make this significant change to our family business.
“Having worked for Carreg for ten years, I am really pleased that my parents can now start reducing their time in the business, but also I am delighted that we can continue the company with the same ethos.’’
Carreg Construction was advised on its employee ownership transition by Social Business Wales, which is delivered by Cwmpas and was supported throughout the process by independent EOT specialist, Alun Thomas.
Branwen Ellis, specialist employee ownership consultant for Social Business Wales, said: “We were so pleased when Carreg Construction came full circle and came to feel that an EOT was the best succession solution for them.
“Going down this route, has enabled the owners to put their own plan in place in line with their own timescales, expectations and values. As Andrew and Sue have discovered, the EOT model enables them to slowly and securely pass their business onto the next generation of the Carreg team, ensuring the long term sustainability of the business, employees’ jobs and the couple’s legacy.” Geldards advised the EOT on the acquisition of Carreg Construction from the Phillips family.
Andrew Evans, partner at Geldards, said: “We were delighted to act for Carreg Construction, and it was a pleasure to work with Andrew and Amy to guide the directors and the employees through the process to becoming employee owned.
“As well as advising on the formation of the EOT, Geldards were pleased to help employees understand their new roles and responsibilities as trustees. The purchase by an employee ownership trust will enable the highly skilled workforce to continue with their award-winning construction projects with minimal disruption to the business.”
Carreg Construction was also advised by Azets finance. Partner with the firm Katherine Broadhurst said: “We have been delighted to be involved in Carreg’s journey towards Employee Ownership over a period of time both directly and with the support of Cwmpas.
“We are sure that the company will continue to go from strength to strength and the employees will build on the culture and values established by Andrew and Sue and ensure that the award-winning specialist skills are retained in Wales for the future.”
Holyhead Towing Company
Owners of a North Wales tugboat venture with an international client base are seeking to exit the business.
Founders and sole equity holdings of Holyhead Towing Company, a subsidiary of Holyhead Boatyard, the Meade family, have appointed finnCap Cavendish to explore exit options and consider approaches.
Founded in 1966 by John and Audrey Meade the business has grown to become an international provider of specialist offshore, shallow-water services through its fleet of tugboats and workboats. The company’s current fleet has been valued at more than £35m.
Its blue-chip clients includes oil and renewable corporates and major dredging companies, Holyhead Towing has developed its specialist capabilities in the shallow draught vessel market, establishing itself as a leading player across energy and civil marine infrastructure projects in European, the Middle Eastern, African, and South American waters.
After a challenging period for the sector, the business has strongly rebounded from the Covid-19 pandemic, returning to profitability over its last two financial years. Reportedly, the towing division is set to announce revenues of around £20m and a £4.7m Ebitda for its last year to March end this year. In the previous year it generated revenues of £18.6m and posted a pre-tax profit of £2.7m.
Stewart Graves, chairman, Holyhead Boatyard Group said: “Holyhead Towing has developed an excellent reputation over many years through organic expansion on a global scale. Following a challenging Covid period, the business has returned to position of financial strength thanks to our excellent crews and fantastic management team led by James Burns (managing director). With the forthcoming retirement of the Group chief executive (Captain Mark Meade), the family shareholders believe now is the right time to explore the options available to the business for its next phase of growth.”
The finnCap Cavendish advisory team is led by Andrew Jeffs (partner), and Mike Dinsdale (director).
TXO
Towerbrook Capital Partners (Towerbrook), a London and New York based private equity firm, has acquired a majority stake in TXO, a critical telecom network hardware and asset management services provider.
Based in Chepstow TXO has a global presence and supports the transition towards a circular economy by reducing waste and extending the life of network assets for over 1,500 internationally recognised manufacturers.
A Capital Law team of Tom Kelleher, Gareth Williams-Davies and Cath Golledge advised the management team on their re-investment alongside Towerbrook.
TXO group chief executive Darren Pearce, said:“We are immensely proud that TXO has developed into one of the largest and most respected solution providers in critical telecom network hardware and asset management services, with sustainability in our core values from the very beginning.
“With the opportunity to accelerate our international journey and expand our customer offering, while remaining anchored in our sustainability values, we are delighted to embark on this journey with TowerBrook.
“We, as a management team, were advised by Capital Law (Tom Kelleher, Gareth Williams-Davies and Cath Golledge) who provided us with invaluable pragmatic and commercial advice throughout the transaction. The team led by Tom, were a pleasure to work with and we thank them for their support.”
Mr Kelleher, who leads Capital Law’s corporate team, said: “As well as being the world’s leading provider of critical telecom network hardware and asset management services, TXO’s outstanding ESG credentials are clear for all to see – they are a genuine circular economy company. It was a fantastic deal to work on and the management team, led by Darren and Simon, were a pleasure to work with. The deal with Towerbrook is extremely exciting and we are sure it will be a successful partnership. ”
SCS Engineering
Cardiff-based SCS Engineering, a UK-based leader in smoke control solutions for residential and commercial buildings, has been acquired by Systemair AB.
SCS provides smoke control solutions, building management systems and post-installation services for its customers. SCS has its head office in Cardiff, an assembly plant in Dorset and offices in London and Portsmouth. SCS, which was advised by Lexington Corporate Finance, employs 57 full time employees and had revenues of approximately £12m in 2022.
Systemair is a leading ventilation company in Europe that manufactures and supplies HVAC products, as well as fire safety products. Operating across 52 countries, it had sales of £905m in the 12 months to 31 January 2023, and has been publicly listed on the Nasdaq OMX Nordic Exchange in Stockholm since 2007.
The acquisition of SCS will provide Systemair with greater experience in designing, assembling, commissioning, and servicing complete smoke control solutions that will further strengthen Systemair’s position in both the residential and commercial sectors. As new regulations come into effect in the UK in 2023, SCS is well-positioned to capture business opportunities in both renovation and new installations of smoke control systems.
Lexington acted as the lead advisor on the acquisition, having previously acted for SCS on its MBO in 2018. The Lexington team of Thomas Edwards, Pablo Shorney, and Charlie Lesbirel managed all communications, negotiated the terms of the deal with Systemair and directed the process through to a successful completion.
Christopher Jones, managing director at SCS, added: “The Systemair acquisition provides an exciting opportunity and new chapter for SCS as part of Systemair. Lexington’s support and advice throughout the process was instrumental in delivering the best outcome for all of SCS’ shareholders. Since we first engaged with Lexington five years ago to advise on the MBO, the Lexington team has continually delivered an exceptional service and I would highly recommend Lexington to anyone considering succession planning for their business.”
Mr Edwards, director at Lexington, said: “We have worked with SCS since 2017, and it’s great to see the plans the organisation had back then come to fruition - it’s a prime example for anyone looking at succession planning in Wales. SCS is a market leader in its field in the UK, and this transaction will help with the next stage of growth both in the UK and in Europe.”
Legal advice to the shareholders of SCS was provided by Paul Evans, Ellen Lewis and Caitlin Rees at Berry Smith.
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