Crafting a £100m+ factory solutions firm
Mpac has acquired Ohio based Switchback Group, Inc. for a maximum of $15m in cash (£11.4m). Equivalent to modest takeover multiples of 7.1x EV/EBIT and 1.1x EV/sales – with $13m of the consideration paid upfront, and the rest structured as a $2m earnout depending on EBITDA performance over the next 24 months.For us the strategic logic is compelling. Why? Well the beauty of the deal is that the firms’ products are complementary and have little (or no) direct overlap within the same packaging machinery & automation solutions hierarchy. Both organisations serving a wide range of food, beverage and healthcare clients, with Switchback possessing further bench strength in the expanding US craft beers segment (+3.6% organic).
With regards to the numbers, we have increased our 2020 revenue (+5%) and adjusted EBIT (+9%) forecasts to £83.6m and £5.8m (margin 7.0%) respectively. Which in turn has lifted the valuation by 8.5% to 380p/share.
Mpac Group is focused on its Packaging Machinery business, Mpac Langen, which designs, precision engineers and manufactures packaging solutions, machinery and high specification automation, secondary packaging equipment and end-of-line robotics and at-line instrumentation and testing solutions as well as providing solutions including the design and integration of packaging systems.
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