Angus Monro, the former Matalan chief executive, has struck his first deal in his new job as head of pipe fittings business Oystertec.
The company is raising £30.6m via a placing and open offer to buy loss-making IBP, part of the European plumbing business of Delta, a publicly quoted engineering business.
Oystertec is paying Delta £28.3m for IBP and has also secured an eight-year pensions holiday, which Delta will fund. It has secured debt funding of £20m to help grow the business.
Mr Monro, who was appointed the chief executive in August, said the deal would take Oystertec into the hugely fragmented European market for plumbing supplies. He said IBP is Europe's number one pipe fittings manufacturer and distributor with 25 per cent of the market. Its customers include Wolseley, Jewson, Travis Perkins and BSS. However, IBP recorded losses of £1.7m on sales of £44.8m in the six months to June after being late with product development and running with excessive overheads. Mr Monro said Oystertec is looking at joint ventures and licensing deals in other sectors such as automotive and hydraulics.
Oystetec is offering shareholders three new shares for every five held at 38p per share, a small discount to the previous day's closing price of 41.5p. The shares closed 5.5p higher at 45.5p yesterday.
Under amendments to Oystertec's share option scheme, Mr Monro will be granted options of more than 4.3 million shares.
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