Rutland sells Interfloor to EAC
19th August 2005
Rutland Partners, the UK private equity partnership, announces that it has agreed the sale of Interfloor Group Limited to a management team backed by European Acquisition Capital in a secondary buy-out for a consideration of £84.1 million.
Interfloor is the largest manufacturer of carpet and laminate underlay and related products in Europe, having the leading position in the mature UK sponge underlay market, with total UK sales of £122 million. It operates from two UK manufacturing facilities in Rossendale, Lancashire and Dumfries, Scotland. It also manufactures and supplies a wide range of related accessories and tools. The Company has a separate subsidiary in Morris, Illinois, which manufactures underlay for the growing North American market. Its well known brands include Duralay®, Gripperrods® and Tredaire®.
Rutland formed Interfloor in May 2002 following the simultaneous acquisitions of Duralay from Cinven and Gates Consumer and Industrial from Tomkins plc for a combined purchase price of £60 million (excluding transaction costs). The original acquisition was funded with £21.2 million of equity from the Fund and £42 million of debt.
Since then Rutland has merged the businesses and implemented an operational restructuring of Interfloor’s manufacturing and distribution to realise the potential of the complementary strengths of the combined business. These changes have resulted in both a strong improvement in the profitability of the Interfloor group and a reduction in its debt.
After repayment of outstanding bank debt of approximately £27.0 million and payment of various transaction related costs and pensions contributions, distributable proceeds to shareholders (excluding Interfloor management) are estimated to be £50.0 million.
Interfloor has been acquired by a newly formed company backed by EAC. The management team will be headed by Phil Reeder supported by a number of existing Interfloor senior management. Mr. Reeder has held a number of senior positions in UK manufacturing industry including being the Chief Executive of two publicly quoted companies, Low & Bonar plc and Expamet International plc.
Interfloor operates in a mature and stable market and its competitive advantages include strong established brands, customer relationships, manufacturing know-how, and distribution networks all of which represent a strong strategic position. EAC will hold a majority stake in the business with significant management participation. Kaupthing Bank is senior debt provider, whilst Hutton Collins and Company is providing mezzanine debt.
Commenting on the sale, Nick Morrill of Rutland said:
“The successful integration, restructuring and sale of the Interfloor business is a prime example of a Rutland investment. As an active investor, we believe we have helped management add value to a complex situation in order to improve trading performance. We believe that EAC are acquiring a strong business with a good future.”
Commenting on their new investment, Robert Mason of EAC said:
”Interfloor is an exciting investment for us. It enjoys a leading market position and clear competitive advantages in a mature industry with high barriers to entry as well as a high level of operational gearing. We believe there is a significant opportunity to continue to improve the profitability of the business through initiatives to further enhance operational effectiveness and efficiency.”
Rutland's Financial Advisors:
Ernst & Young:
- Ken Williamson
- Andy Morris
- Tremayne Ducker
Rutland's Legal Advisors:
- Tim Eyles
- Richard Clifton
- Nick Hazell
EAC's Financial Advisors:
KPMG Transaction Services:
- John Hughes
Clearwater Corporate Finance:
- Michael Reeves
EAC's Legal Advisors:
- David Baylis