Marley in $140m US purchase
Wednesday 29 March 1995
Marley, the building products group, is spending $140m (£87.7m) to acquire Syroco, a US company that makes plastic furniture .
The purchase is to be financed partly by a one-for-six rights issue, which will raise £51.8m, with the rest funded by a bank loan.
Syroco's plastics technology, which is used in manufacturing garden and some indoor furniture, is similar to that used by Marley in its UK operations.
The move fits with Marley's strategy of concentrating on its plastics and automotive operations while withdrawing from concrete and clay building products businesses.
Syroco made an operating profit of $20.8m on a turnover of $95.5m in the year to December. Marley expects the full-year contribution in 1996 to be around the same level.
David Trapnell, chief executive, said that while in a full year the acquisition should enhance group earnings it might dilute earnings in the current year. Mr Trapnell said: "We have been saying for the last three years that our strategic direction will continue to be to develop our plastics business, particularly overseas. This is one such opportunity.
"It fits very well with our existing businesses in the US. They [Syroco] are in a growth market, and they are a leading player."
The financing arrangements for the American purchase mean that Marley's gearing is increasing to 43 per cent from 32 per cent. The company said that it was comfortable with this level.
Although Marley under chairman Sir George Russell reported a big improvement in performance in the year to December when it announced its results earlier this month, analysts have been concerned that the company will find it difficult to expand in the UK in current market conditions.
Pre-tax profit was £58.7m in 1994, a turnaround from a loss of £2m in the previous year. Turnover was £667m.
Plastic furniture sales are heavily dependent on the housing market, which is currently in the doldrums.
Syroco has manufacturing plants in New York, Arkansas and California. It sells to the public through warehouse clubs, catalogues and supermarket chains.
The news of the rights issue and the warning of a possible dilution of earnings this year sent Marley's share price down 11.5p to close at 122p yesterday.
The rights issue is being underwritten by SG Warburg and Credit Lyonnais Securities.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...