Sidlaw buys 11 Courtauld businesses

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The Independent Online
SIDLAW GROUP, the Dundee mini-conglomerate, yesterday took a big leap forward to expand its packaging activities with the acquisition of 11 businesses from Courtaulds, the chemical materials group, for pounds 79m.

The purchase, three times the turnover of Sidlaw's existing packaging division, is being financed by a pounds 53m rights issue and debt.

The deal concerns Courtaulds Flexible Packaging, which has operations in Britain, the Netherlands, France and Spain. In the year to 31 March it made operating profits of pounds 6.1m on sales of pounds 108m. This compares with operating profits of pounds 3.8m on sales of pounds 35.5m achieved by Sidlaw's business in the year to 30 September.

Digby Morrow, Sidlaw's chief executive, said the acquisition would give the enlarged group access to a wide range of food markets. Sidlaw was active in frozen food packaging and CFP had a strong presence in snacks.

The combined business will derive two-thirds of its turnover from the UK and the balance from Continental Europe. It will also become the biggest division in the enlarged group, overtaking Sidlaw's other two businesses in oil services and textiles.

The purchase price equals about 18 times CFP's earnings, but Sidlaw said the acquisition would be 'broadly neutral' in its first full year. The business, being bought free of debt, had net assets of pounds 53m at 31 March.

However, the move will push up Sidlaw's borrowings from pounds 11.4m to pounds 42.3m. The enlarged group's pro forma net debt is expected to amount to 62 per cent of shareholders' funds.

The four-for-seven cash call at 275p a share was accompanied by a dividend forecast. Sidlaw said it expected to pay a final of at least 6.25p this year, making a total of at least 10.5p against 10p last year.

Courtaulds said it was selling the flexible business for a pounds 12m pre-tax profit. It will retain CFP's rigid packaging and tubes business, which it plans to develop further.

Sidlaw shares fell 17p to 328p. Courtaulds were unchanged at 542p.