Earnings-enhancing vaping products acquisition
Supreme PLC has announced the acquisition of Liberty Flights Holdings Limited for an initial consideration of £7.75m, with a deferred £2.0m and performance-related earn-outs taking the total potential consideration up to £14.75m. The acquisition of this leading UK manufacturer of closed system vaping products significantly enhances Supreme’s vaping customer footprint, and introduces new opportunities for cross-sales into Liberty’s customer base.Founded in 2010, Liberty Flights is the manufacturer and brand owner of the Liberty Flights vaping brand, and Dot Pro closed system vaping device range. The acquisition from Liberty Flights’ three shareholders is funded from Supreme’s £25.0m HSBC revolving credit facility.
We estimate that in FY23 the acquisition will add revenue of c.£7.0m (+5.1%) (c. 9 months) and EBITDA (adj.) of c.£0.8m (+3.5%), and in FY24 add c.£9.0m (+6.3%) and £1.5m (+6.2%) respectively. Vaping products rise from an estimated 33.4% of total Supreme revenue in FY22 to 43.1% by FY24. We estimate that cost savings will accrue from 12 months post-acquisition.
Based on revised forecasts, our fair value is increased from 230p to 245p/share.
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