Franchise Brands PLC (AIM:FRAN) has decided to terminate early the earn-out agreement for Willow Pumps and integrate its staff with the workforce at recent acquisition Filta.
Willow Pumps was acquired by Franchise Brands from its managing director Ian Lawrence and his wife in 2019 for an initial £5mln plus a deferred 7.5mln spread over five years.
Some £664,500 of that deferred consideration has been paid already and Franchise Brands will buy out the rest for £1.335mln, making £2mln in total, to end the earn-out, the company said in a statement.
Ian Lawrence will now become non-executive chairman of Willow Pumps with Kevin Perry, previously head of sales and marketing, to be Willow Pumps' new managing director.
Franchise Brands added that Willow Pumps has been impacted by the disruption caused by COVID-19 in the past two years, particularly in the housebuilding sector, and that streamlining its operations with Filta would enable both businesses to grow.
The final payment to terminate the earn-out is expected to result in an exceptional profit of £1.6mln in the year ending 31 December 2022.