London-listed private label toilet paper supplier Accrol is being targeted by an overseas buyer in a £130m takeover bid.
Portugal’s Navigator, a paper and pulp group listed on the Lisbon Stock Exchange, offered 38p a share to buy the Blackburn-headquartered business that counts all the UK’s major supermarkets and discounters as customers.
It represented a 11.8% premium to the stock’s closing price prior to the bid, and a 29% jump on the average price over the past six months, valuing Accrol at £127.5m.
Navigator said the takeover offered “a compelling opportunity” to enter the UK market and would create a group with consolidated turnover in the tissue paper market of about £500m.
It added the combination would help Accrol compete better with the likes of Kimberly-Clark, Essity and Sofidel, which all operate vertically integrated models, and leave it less exposed to fluctuations in raw material prices.
“Accrol brings an outstanding business franchise, including an exceptional customer base, highly skilled employees, and a solid track record of producing quality tissue products,” said Navigator CEO António Redondo.
Accrol CEO Gareth Jenkins added that the company had undergone “a period of significant transformation and growth” over the past four years.
“Combining with the Navigator Group brings together a highly complementary product offering,” he said. “It will enable Accrol to benefit from the capabilities, scale, network and resources of Navigator, building on the strategic progress we have made to date.”
Accrol, which also makes the Softy facial tissues, Elegance toilet paper, Magnum kitchen roll and Little Heroes baby wipes, was established in 1993 by the Hussain family in Lancashire.
By 2014, after significant expansion, the group’s turnover had grown to more than £100m and it operated from a factory and warehouse with in excess of 350,000 sq ft of space.
The group floated on London’s AIM market in 2016 at 100p a share with a market cap of £93m. However, it struggled initially as a listed company, posting repeated profit warnings, resulting in shares hitting a low of 6.6p in 2018.
Its performance has turned around since Jenkins took the helm in late 2017, with revenues on track to hit £205m in 2024 and EBITDA expected to be at least £21m.
Navigator is primarily known as a high-quality writing paper specialist but diversified into the tissue category in 2014, followed by several acquisitions.
Shares in Accrol jumped more than 12% as a result of the bid.
Accrol’s directors intend to unanimously recommend shareholders vote in favour of the takeover.
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