Victoria PLC (LON:VCP) may have taken a step away from ESG standards after acquiring artificial grass and carpets firm Edel Group.
Made of plastic, fake grass has no climate benefits, is hugely polluting to produce and to dispose of once it runs its course.
The integration of Edel with Victoria's existing artificial grass business will create the largest premium landscaping grass group in Europe with revenues of more than €77mln, the company said.
Their distribution networks don’t overlap and the integration will cut raw material costs and improve productivity.
The flooring designer and manufacturer paid €49.4mln (£42.9mln) for the Dutch company, which generated revenues of €47mln (£41mln) and earnings (EBITDA) of €10mln (£8mln) in 2020.
Edel, which comes with €20mln (£17mln) of net debt, saw revenues jump 7% over the past three years, including during the pandemic when trading was boosted by consumer focus on home improvement.
The outlook for domestic demand remains positive with growing consumer acceptance of artificial grass due to enhanced realism and increasing awareness of its advantages when compared with natural grass, including limited maintenance and water requirements, Victoria said.
There is also a backlog in municipal and commercial landscaping applications, school and play areas and sports landscapes, which were deferred during 2020.
Analysts at house broker Peel Hunt increased the target price from 980p to 1,020p.
“The company expects to deliver further acquisitions in the coming months as part of the target to add £100mln EBITDA to the existing business,” they noted.
Shares in Victoria rose 3% to 1,010p on Tuesday morning.