An opportunistic and strategic acquisition
Strix’s announcement of their conditional purchase of Billi is another example of the management’s ability to identify acquisitions that are both good value and make excellent strategic sense. The group has been eyeing the multifunctional tap market for some time. Not only does the merger widen the group’s product portfolio, but it additionally brings in new markets – not least into commercial offices. We also expect the strong cash flow from Billi to result in a rapid deleveraging of the Group. We note the Directors’ subscription in the placing, amounting to £0.37m.Based on projections for proforma revenues and EBITDA to December 2022, we think the acquisition represents excellent value at 0.87x projected and 3.725x, respectively. We believe the highly attractive purchase price largely reflects Strix’s ability to move very quickly on the deal, helping the Culligan/Waterlogic merger to progress.
Significantly, the merger presents an opportunity for targets in the Group’s five-year plan to be met a year early, but for now we conservatively hold our financial estimates and Fair Value per share, with the latter now at a significant premium to the current price.
Strix Group is a holding company. Through its subsidiaries, Co. is engaged in the designing, manufacturing and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration. Co.'s core products are kettle safety controls, which are responsible for disconnecting the power to the heating element when either water has boiled, operated with no water present, or in some products when the kettle is lifted off its base.
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