Bunzl buys Pierre Le Goff in £220m deal
Tuesday 11 May 2004
Bunzl, the specialist packaging supplier, made its first move on the French market with a £220m takeover of rival supplier, Groupe Pierre Le Goff.
The all-cash deal for the privately owned business will grow Bunzl's cleaning and safety product division, where Groupe Pierre is a specialist, and is also designed to springboard further expansion into Sourthern Europe. Bunzl, whose clients include major supermarkets such as Wal-Mart and Sainsbury's, will take on around 94m euros (£63m) of debt as part of the acquisition. Groupe Pierre, based in Quimper, Brittany, generated 421.5m euros in sales last year and profits of 35.4m euros and is a market leader in sourcing hygiene and cleaning equipment and goods for France.
"It increases our European business by approximately one third and establishes a strong platform in a key European market at a time when the internationalisation of customers and suppliers is continuing," Anthony Habgood, the chairman of Bunzl, said yesterday. He said Groupe Pierre operated in similar markets to those of Bunzl in the rest of Europe and had a similar customer base. The existing top management team, the husband and wife duo of M and Mme Le Goff, are staying on to help see through the integration and begin building relationships in Southern Europe.
Analysts yesterday welcomed the takeover, which, while not considered cheap, was expected to lead to a 7.5 per cent earnings boost in 2005.
"This is a strategically important geographical fill-in," analysts at Dresdner Kleinwort Wasserstein said yesterday. "It is the missing major piece of the European jigsaw, giving leverage with customers and suppliers."
Some shareholders in Bunzl, which also owns Filtrona, the cigarette filter business, had been expecting the possibility of a share buy-back as the company does not have much debt and is awash with cash. An acquisition was yesterday viewed as a more efficient use of the company's capital, as it will lead to further growth throughout Europe. Shares closed at 464p yesterday.
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