Nichols PLC (AIM:NICL), the maker of Vimto, has acquired the Irish functional drinks brand VITHIT for £64 million in cash, its most substantial move yet into the health and wellness end of the soft drinks market.
The AIM-listed group is paying roughly 18 times VITHIT's adjusted operating profit of £3.6 million for the year to 31 December, on a debt-free, cash-free basis.
The deal will be immediately earnings enhancing before one-off transaction costs of about £2.5 million, Nichols said, lifting earnings per share and therefore dividends per share from the 2027 financial year.
Founded in Dublin in 2001, VITHIT sells low-calorie, low-sugar drinks fortified with vitamins, spanning bottled ready-to-drink lines, sparkling cans and effervescent formats.
The business generated revenue of £22.8 million last year, equivalent to about a quarter of the £89.5 million Nichols reported for its own first half, with sales up more than 90% since 2021.
Adjusted operating margin came in at 15.8% and net assets stood at £6.6 million.
The purchase has been funded entirely from cash on the balance sheet, leaving Nichols in a net cash position on a pro forma basis at 30 June.
NatWest will provide a new revolving credit facility for working capital after completion, and the recently improved dividend cover policy of 1.5 times has been reaffirmed.
Nichols expects annual synergies of more than £850,000 from a model it describes as asset-light, meaning production is outsourced to third parties rather than run in-house.
The Dublin office will be retained, although founder and chairman Gary Lavin steps down immediately and some of the management team will leave after a transition period.
Andrew Milne, chief executive, said VITHIT matched the acquisition profile Nichols had been seeking and that the group could accelerate its growth through existing customer relationships and international infrastructure.
The brand has established positions in the UK and Ireland alongside a presence in 13 other markets.
