Norcros, a supplier of showers, taps, bathroom accessories, tiles and adhesives, has agreed to acquire Merlyn Industries, a designer and distributor of mid to high-end branded shower enclosures, for £60 million.
The company intends to conduct a placing and open offer to raise gross proceeds of £31.4 million to part-fund the acquisition through the issue of 18,254,161 new ordinary shares at a price of 172 pence per share.
In the year ended 31 March 2017, Merlyn reported revenues of £30.7 million and operating profit of £6.4 million.
The acquisition is expected to be earnings enhancing in the first full year of ownership, and the return on investment expected to exceed Norcros' cost of capital.
Nick Kelsall, group chief executive, said the deal substantially broadens the company's bathroom product offering.
"Merlyn's focus on design, new product development and its standard of customer service will significantly enhance the group's portfolio," he added.
At 9:16am: (LON:NXR) Norcros PLC share price was -2.37p at 180.38p