New era for Allied Glass in £75m buyout

ALLIED Glass, the West Yorkshire manufacturer, completed a £75m management buyout yesterday with the backing of Barclays Private Equity.

The buyout team was led by Alan Henderson, 36, who joined the company in 1996 as a graduate trainee.

Allied Glass makes glass containers for the spirits industry and has customers including Diageo, Chivas and William Grant & Sons. It employs 630 people at sites in Leeds and Knottingley and is on target for a turnover of 84m this year.

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Mr Henderson described the deal as "a great opportunity" for the company and said the new backers would support future investment, including possible acquisitions.

"It is a fantastic time for Allied Glass," he told the Yorkshire Post. "We achieved growth last year in terms of revenue and profit against (difficult economic] conditions.

"This year we are achieving growth over and beyond last year. We can see a good future for where we are headed."

The transaction represents the second buyout at the business. The first took place in 2002 when management, led by Andrew Spencer, bought Allied Glass from its parent Associated British Foods in a deal worth between 40m and 45m with backing from Close Brothers Private Equity.

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Mr Spencer becomes executive chairman following yesterday's deal, while Mr Henderson assumes the role of MD. Mr Henderson said Allied Glass has received major investment since 2002, which has been reflected in a 40 per cent rise in turnover.

The company has spent 30m over the last three years on its three large furnaces. It has also bought a new furnace for premium flint, a new product line in very clear glass designed for the high-end spirits market.

Mr Henderson said: "We have good growth potential in our asset base and we have a new product line, which is being well received in the market."

Allied Glass exports to countries including France and Russia and is looking at new markets in places like Poland.

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Mr Henderson described the company as a "proper manufacturing business", which takes the raw constituent materials of sand, soda ash and limestone and melts them in a furnace before using machines to create a finished product, ranging from 5ml shot glasses to 4.5 litre containers.

He said Allied Glass's exposure to different markets has insulated it from local economic fluctuations. He added: "We are seeing a bit of natural uplift (in the general economy] from last year, but I don't think that's difficult."

Turnover last year was 78.3m, with profit before interest and tax of 8.6m. Mr Henderson said the company is on target for a turnover of 84m this year.

It has taken on a "prudent" level of debt in the latest transaction, he added. "We have targeted the whole deal around the business being strong and stable rather than trying to maximise any value for it."

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It is understood that the Barclays stake is around 55 per cent and that the banks involved, Lloyds and HSBC, offered more debt than was finally used. David Hardless, a partner at Park Place Corporate Finance, advised the management team. He said the deal was driven by three factors. "It was right for the management team to transition, with a couple of the older guys retiring and a new young team getting into the driving seat of the business," said Mr Hardless.

"Close Brothers have been invested for seven or eight years and it was the right time for them to exit.

"The business in mid-2008 invested in a fourth furnace. That gives the investment case for growth therefore for a new equity provider to come in."

Mr Hardless said he expected to see more private equity deals and secondary buyouts. "Private equity firms have more money to invest than they can find quality deals," he added.

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In the Allied Glass transaction, Eversheds provided legal advice to the sellers, while Pinsent Masons advised the buyers.

It is the second deal in a week for Barclays Private Equity, which exited Leeds-based fleet management firm Zenith Provecta following the 85m buyout backed by Morgan Stanley.

Leeds-based Park Place also advised the management team on that deal.

A TALE OF SUCCESS DOWN THE CENTURIES

Allied Glass has a history steeped in glass making. Although the company name was adopted barely a decade ago, the business can trace its roots back to the latter half of the 19th century.

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Its operations today are an amalgamation of Lax and Shaw, founded by Thomas Lax and John Shaw in Hunslet, Leeds, in 1891, and the Hope Glass Works of Knottingley, originally home to Gregg and Company, which dates back to 1874.

The new managing director Alan Henderson, pictured, was born a century later in 1974 and grew up in Sheffield.

He studied industrial management at Sheffield Hallam University and, asked about his childhood ambition, said: "To be what I am today."

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