Franchise Brands announces the transformational acquisition of Pirtek Europe

Franchise Brands is pleased to announce the transformational acquisition of Pirtek Europe for £200m. Pirtek is an established European provider of mission-critical, emergency response on-site hydraulic hose replacement and associated services within a target one-hour arrival time, 24/7/365 from 213 service centres and 838 mobile service vehicles.

By expanding the Group’s operations to ten countries, the acquisition will significantly advance the Board’s aim to create a market-leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and continental Europe.

We look forward to welcoming Pirtek’s 70 franchisees and all its people across eight countries to the Franchise Brands family. Thank you to our investors for their support in raising £92m in the placing and to our bank lenders and advisers: Dowgate Capital, Allenby Capital, Stifel, MHP, Gateley, BDO, Deloitte and Verlingue.

Highlights of the announcement include:

• Pirtek operates in eight countries in Europe, providing its mission-critical, emergency response van-based service within a target one hour arrival time, 24 hours a day, 365 days a year, largely through its 70 franchisees.
• Pirtek undertakes more than 500,000 jobs per year, from 838 mobile service vehicles and 213 service centres.  It services a diverse portfolio of thousands of customers, counting Veolia, Balfour Beatty, Amey, Biffa, CAT and Tarmac amongst its clients. Its core end markets include waste treatment and recycling, equipment rental, construction, agriculture, mining, events, logistics and transportation.
• It has a strong history of growth, with a 5-year Adjusted EBITDA compound annual growth rate of 18.8% to 31 December 2022; its systems sales were £164.1 million in 2022*, with Adjusted EBITDA of £14.7 million.
• The Acquisition is expected to be immediately earnings accretive.
• The acquisition and working capital requirements of Pirtek will be funded by new bank debt facilities of £110m, and £114.3m in equity issued by the company  which includes the £92m raised through the Placing, conducted through an accelerated bookbuild overnight, alongside a Subscription by Pirtek management and employees, and the issue of Consideration Shares.

Commenting on the acquisition, Franchise Brands Executive Chairman, Stephen Hemsley (who during his 21 years at Domino’s Pizza as FD, CEO and Chairman took it from private ownership to a market capitalisation of almost £1.5bn) said:

"We are pleased to have successfully completed the bookbuild for the fundraise with the support of both new and existing institutional investors. This will enable us to proceed with the transformational acquisition of Pirtek Europe, a high quality provider of mission-critical, emergency response on-site hydraulic hose replacement and associated services."

“The Acquisition brings an established business of scale with an attractive financial profile and growth prospects and will significantly expand the Group’s range of B2B services, customer base and end markets."

"Building on the strong performance of the Group’s acquisition of Filta in March 2022, which brought an international footprint in North America and Europe, Pirtek Europe will extend the Group’s European presence across a number of key countries, providing a platform from which to launch the Group’s existing brands."

"By expanding the Group’s operations to ten countries, the Acquisition will significantly advance the Board’s aim to create a market leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and continental Europe."

"We would like to thank our investors for their support and we look forward to driving shareholder value by working with Pirtek Europe’s strong management team to accelerate growth and drive operational leverage across the combined business.”

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