In a filing to the London Stock Exchange today (6 July), Coats Group Plc says it has signed a definitive agreement to acquire 100% of Texon International Group Limited.
Texon makes structural components for global footwear, accessories and apparel industries and has operations in Asia and Europe. Coats says it is a complementary addition to its existing footwear business with attractive commercial opportunities from leveraging Coat’s existing footprint.
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Under the terms of the transaction, Coats has agreed to pay an enterprise value of US$237m, and a total net cash consideration of $211m after deducting assumed retirement liabilities and other customary adjustments. The acquisition is expected to be earnings accretive in the first year and will be funded initially through a bridge financing facility with net leverage to remain within the group’s stated target of 1.0x to 2.0x.
Rajiv Sharma, Coats Group chief executive, says: “The acquisition of Texon will strengthen our existing presence in the highly attractive athleisure footwear market. The business is complementary to Coats and provides attractive future commercial opportunities as we work together leveraging our combined expertise and knowledge to succeed with our customers. We recognise and share Texon’s focus on sustainability and innovation and believe that this acquisition strengthens our ability to fulfil these shared ambitions.”
The company adds the acquisition is expected to generate annual synergies of approximately $5m by the end of the second full year of ownership through efficiencies in commercial, procurement, marketing, distribution and production.
In May, Just Style revealed exclusively that Coats had made a number of UK-based redundancies and replaced other roles as part of its global strategy, in the same week the company announced the sale of its Brazil and Argentina business.
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By GlobalDataAt the time, Sharma explained the sales were to “safeguard the future of the organisation,” and the company intended to use its strong balance sheet to invest in sustainability, innovation, growth capex and acquisitions.
Who is Texon?
With a heritage dating back more than 75 years, Texon’s product portfolio includes structural components, woven materials, cellulose solutions, and high-performance fabrics. Texon has been a supplier to some of the world’s leading brands, including adidas, Clarks, New Balance, Decathlon, NIKE, VF Corp and Wolverine.
The Coats filing states that for the year ended 31 December 2021, Texon generated revenue of $132m; EBITDA of $21m; and adjusted operating profit of $17m.
