Plastic products firm acquired at 9.3x profits

Plastic products firm Ecodeck has been acquired by plastics manufacturer Coral Products in a deal that could rise to £5.6 million. If the full consideration is reached, the deal would represent a 9.3x multiple of Ecodeck’s post-tax profits of £900,000 for the year ending January 30 2022, generated on sales of £6.8 million.

AIM-traded Coral Products said the consideration would be satisfied through an initial £3.35 million cash payment, the issuing of 6,250,000 shares and earn-outs of up £1.25 million. The first earn-out, payable for the year ending January 31 2023, will be an additional £3 for every £1 of profit of tax over £1 million, up to a maximum payment of £1.15 million. The second earn-out would be payable through a 10 per cent profit share of pre-tax profits for the three months to April 30 2023, if pre-tax profits exceed £1.5 million in the year ending on that date. Finally, the third earn-out would be a 10 per cent profit share of pre-tax profits over £1.5 million for the year ending April 30 2024. Coral Products added that the maximum payment for the second and third earn-outs would not exceed £100,000.

Ecodeck supplies building and landscape products including driveway grids, gravel pathway grids and plastic shed bases. The company’s products, which are made from 100 per cent recycled plastic, are environmentally and eco-friendly.

Coral Products, which is based in Wythenshawe, specialises in designing, manufacturing and supplying plastic products. The firm has manufacturing sites in Wythenshawe, Denton and Haydock, as well as a distribution facility in Hyde.

Commenting on the acquisition, Coral Products Executive Chairman Joe Grimmond said: "This acquisition further reinforces our focus on niche, specialist operators in the plastics sector.”

"We have an opportunity to leverage Ecodeck's on-line platform for other group eco-friendly products. We see significant scope to add value as we integrate the business into the group - the acquisition continues to broaden our group's product offering and greatly enhances our available market opportunities. We expect this acquisition will be earnings enhancing in its first year."