IG Design Group PLC (LON:IGR) has agreed to buy US gift packaging firm Impact Innovations for £56.5mln on a cash and debt free basis.
The company, which makes celebration, gifting and stationery products, also said it has raised £50mln through a share placing to help fund the acquisition. The placing price of 510p represents a discount of 0.06% to the volume weighted average price of 510.3p for the five days to August 24.
Placing significantly oversubscribed
IG Design said the placing was significantly oversubscribed with strong support from new and existing institutional shareholders.
Some £31.9mln of the proceeds will be used for the acquisition of Impact Innovations, which is expected to be completed around August 31 after the first tranche of placing shares are admitted to trading on AIM.
In the year to 31 December 2017, Impact Innovations generated underlying earnings (EBITDA) of US$15mln on revenues of US$155.9mln.
IG Design said it believes the deal will create the world’s largest consumer gift packaging business and deliver significant earnings accretion in each of the next three financial years.
It also expects the acquisition to bring annual synergies of more than US$5mln by the third year following completion.
The deal will allow IG Design to expand in the seasonal décor product category in the US, the company added.
"The combination of Impact Innovations with Design Group not only doubles the scale of our business in the Americas, it further enhances the overall performance and growth potential of our whole Group whilst continuing to illustrate our delivery of the group's stated strategy," said Paul Fineman, chief executive of IG Design.
IG Design said trading in the year to date has been “strong” and maintained its full year guidance.
Shares gained 4.5% to 547p in morning trading.