Deal-hungry document management company Restore (RST:AIM) has hit the acquisition trail again, investors welcoming the strategically-important takeover of PHS Data Solutions.

Set to boost Restore's earnings in the first full year of ownership, the deal not only brings scale in document shredding but also extends the canny consolidator's presence as the UK's second largest records management operator.

Investors certainly like the latest M&A move from the London-headquartered office services provider, which has grown with the help of a flurry of acquisitions since 2010.

Shares in the successful buy-and-build rebound 10.8% to 319p on the purchase of PHS, the country's second biggest document shredding services business, from Personnel Hygiene Services.

Web chart - RESTORE - July 16

Building on the acquisition of Wincanton's (WIN) records management business last year, PHS will be combined with Restore Shred, the UK's third biggest document shredder. Significantly, the deal catapults Restore to number two in the UK shredding market, an attractive industry in which it now has the necessary scale for further expansion.

Restore will fund £27.7 million of the consideration through a £35.2 million placing, priced at 290p and oversubscribed with new and existing investors wanting in on the action; the remainder will be funded from existing debt facilities.

PHS, which made profits of £8.4 million on £46.8 million sales in the year to March, processes some 65,000 tonnes of paper a year and securely destroys confidential items for customers. It also has a significant records management business – extending Restore's position as the UK's second largest records management operator, as well as a presence in document scanning.

The deal should yield 'significant synergy benefits' through integration and broker N+1 Singer expects to hike its full-year pre-tax profit estimate from £22 million to £29 million, once it has comprehensively crunched the numbers.


Steered by CEO Charles Skinner (pictured above), Restore has won a City following by targeting sectors of the market which benefit from recurring revenues, long-term customer contracts and a degree of operational complexity. In a soothing trading update for the half to June, Skinner confirms trading was in line with expectations and the integration of Wincanton Records Management (WRM) is proceeding to plan.

Issue Date: 20 Jul 2016