Ezi deal for Victoria Carpets

Carpet maker Victoria has bought Ezi Floor, a Bradford-based manufacturer of underlay and underlay accessories, for up to £20m in a deal which will enhance earnings immediately.

Geoff Wilding, chairman of Victoria PLC, said: "Ezi Floor is an efficient operation with very focused management that will stay with the business."

Victoria, which already has operations in Yorkshire following the purchase of Holmfirth-based Westwood Yarns in 1989, said it has paid an initial cash payment of £6.5m and will pay a further £6.5m over the next four years. Further payments of up to £6.5m may follow depending on financial targets being met over the next four years.

Victoria said Ezi Floor has a modern, well equipped, manufacturing facility near Bradford and it makes and distributes a range of underlay and underlay accessories for both the residential and contract markets. It sells to wholesalers, retail groups, and independent stores throughout the UK.

Sign up to our Business newsletter

Sign up to our Business newsletter

Victoria expects ​Ezi to make earnings of £2.4m for the year to March 31, 2017. Total net assets acquired on completion were £5.1​m.

Geoff Wilding, ​c​hairman of Victoria​ PLC​, ​said:​ "​Ezi Floor is an efficient operation with very focused management that will stay with the business, and which is expected to make a positive contribution to Victoria's profits.

​"​The business is highly-regarded within the industry, fits very well with our growth strategy, and delivers immediately accretive earnings.​"

​"​We believe underlay to be a real opportunity and Victoria is already actively looking at other opportunities in the underlay sector.​"

A​ year​ ago Victoria ​bought underlay manufacturer Interfloor.

​"​Since then, cross-selling opportunities - almost all consumer carpet purchases require underlay - and purchasing improvements as a result of the ​g​roup's scale have successfully and significantly improved the earnings of that business​," said Mr Wilding​.

​"​The integration of our previous acquisitions has been completed and Victoria is already benefiting from our strategy of achieving scale through acquisitions and we look forward to integrating Ezi Floor and developing the business as part of Victoria."

​Victoria said the acquisition of Ezi continues its strategy of expanding the business by making ​earnings-enhancing acquisitions, and then using scale to drive further increases in profits. It added that Ezi will be an "excellent strategic fit" with Victoria's existing business and will have strong long term growth prospects as part of the group.

Analyst Ian Osburn at Cantor said the acquisition shows the success of Victoria’s growth strategy.

"Considering management is explicit that there is no shortage of acquisition opportunities and it feels on track to meet all objectives for the current financial year, we see continued potential upside to Victoria’s shares. We reiterate our 'buy' recommendation and increase our target price to 405p."

The enlarged ​Victoria g​roup now has 1,700 employees and operates from 10 sites in the UK, and three in Australia.

​Ezi's k​ey management ​team ​have agreed to remain with the business for a minimum of four years.

​Victoria said it does not expect significant integration costs arising from the acquisition.