Wagon acquires Belgian firm

WAGON Industrial Holdings, the engineering group, is expanding its materials handling business with the acquisition of Polypal, a Belgian company, for about pounds 32m.

The purchase is being funded by a pounds 31m rights issue at 335p a share, compared with yesterday's closing price of 395p, down 7p.

Polypal, quoted on the Brussels stock market, is a manufacturer of pallet racking products for use with warehouse storage systems. Last year it made taxable profits of pounds 4.3m on sales of nearly pounds 35m. Net assets amounted to pounds 9.7m.

Under the terms of the deal Wagon has reached agreement to acquire almost 53 per cent of the target's equity from a syndicate of investors and plans to make an offer for the balance.

The acquisition will add complementary products to Wagon's existing range and will strengthen its distribution network in Continental Europe.

The move was accompanied by a sharp improvement in half-year results at Wagon. Taxable profits have jumped from pounds 6m to pounds 8.5m for the half-year to 30 June.

Fully diluted earnings rose 10.1p to 14.6p. The interim dividend is 6.32p and it is forecasting a final payout of at least 10.68p. The group is debt-free.

Despite the sharp improvement the group is cautious about trading prospects. 'Demand patterns are fragile and will need to be monitored closely.'

Kevin Wilson, a divisional chief executive, has been appointed as the group's managing director.