Avon Rubber is pleased to announce that it has signed an agreement to sell milkrite | InterPuls to DeLaval Holding BV (“DeLaval”) for a cash consideration of £180 million on a cash and debt free basis. The consideration is payable at completion and subject to customary adjustments.
The transaction is subject to customary closing conditions and regulatory approvals, with completion expected to take place in the first quarter of our 2021 financial year.
Post tax and transaction costs, Avon Rubber expects to receive net proceeds before customary adjustments of circa £160 million. The Group has agreed with the trustees of its U.K. pension scheme to make a one-time contribution of £20 million to strengthen the scheme’s funding position following completion. The remaining proceeds will be used to strengthen the Group’s balance sheet as it continues to target value enhancing acquisitions to support the growth of its Avon Protection business.
milkrite | InterPuls is a global leader in providing complete milking point solutions to dairy farmers across the world with the aim of improving every farm it touches and has been a growing and profitable business for Avon Rubber over many years. In the financial year ending 30 September 2019, milkrite | InterPuls generated Revenue of £50.9 million, Adjusted EBITDA of £10.5 million and Statutory Operating Profit of £3.8 million. As at 31 March 2020, the book value of the gross assets subject to the transaction amounted to £50.1 million. milkrite | InterPuls is led by Craig Sage (Managing Director) and Andrew Porter (Finance Director), who will be transferring to DeLaval, along with all other milkrite | InterPuls employees.
milkrite | InterPuls will be treated as a discontinuing operation in our 2020 financial statements. As such, the results of milkrite | InterPuls up to the date of disposal will therefore be reported as a single line item in the consolidated statement of comprehensive income with the 2019 comparators restated on the same basis.
Commenting, Paul McDonald, Chief Executive Officer, said:
"This transaction represents an important step in the strategic development of Avon Rubber. milkrite | InterPuls has been an important part of the Group over many years. However, having achieved our valuation expectations, the Board believes the time is right to allow this business to grow and flourish under new ownership. We wish the whole milkrite | InterPuls team the very best for the future.
Following completion, we will be solely focused on our Avon Protection business, which is recognised as a global leader in respiratory and ballistic protection in Military and First Responder markets. The proceeds of the transaction will provide further funding capacity, enabling us to take advantage of acquisition opportunities to deliver significant strategic and financial value against our clear criteria and enhance our capabilities within our target markets.”