- £22.5 million takeover to accelerate growth
- Victoria Plum recently out of administration
- Deal should drive future upgrades
Bathroom retailer Victorian Plumbing (VIC:AIM) has acquired loss-making arch-rival Victoria Plum as the taps-to-toilets seller looks to accelerate its growth in a competitive yet sizeable total addressable market.
Shares in Victorian Plumbing rose 5.6% to 90.2p on news of the deal, funded from the company’s existing cash reserves and representing ‘another exciting strategic milestone’ for the online baths-to-basins seller according to chief executive Mark Radcliffe.
TAPPING INTO GROWTH
Skelmersdale-headquartered Victorian Plumbing, whose earnings upgrade potential and income credentials Shares highlighted in February, has snapped up Victoria Plum for £22.5 million.
The purchase price represents 0.5 times Victoria Plum’s estimated annual sales and reflects the ‘significant strategic value’ of the Victoria Plum brand and intellectual property to the acquirer.
Liberum Capital said the acquisition highlights ‘the strength of the Victorian Plumbing business, its brand and further entrenchment of its competitive advantages’.
The broker believes the acquisition should be ‘materially earnings enhancing’ for the online bathroom specialist, once Victorian Plumbing captures synergies from a deal that should drive future upgrades.
IN REPAIR MODE
Doncaster-based Victoria Plum was once Victorian Plumbing’s closest online competitor, generating sales of roughly £150 million at peak. But revenues have fallen away to around £40 million and the business is only six months out of administration.
Since Victoria Plum remains in repair mode, it will continue to be traded separately pending finalisation of an integration plan.
But with a cost-cutting programme in progress, Victorian Plumbing expects the acquired etailer to ‘broadly break even’ in the second half of 2024 and stressed the brand continues to boast high awareness.
WHAT DID THE CEO SAY?
Radcliffe commented: ‘I am delighted to announce the acquisition of Victoria Plum, a well-established brand with a solid base of customers, suppliers and product ranges. The acquisition aligns with our ambitions to accelerate our growth.’
He added: ‘This acquisition represents another exciting strategic milestone for the company and, together with the investment in our new distribution centre, provides a unique opportunity to deliver increased shareholder return.’
The opening of its new automated distribution centre in Lancashire is a key upcoming catalyst for Victorian Plumbing which should accelerate growth and boost margins.
This state-of-the-art warehouse will provide capacity to double sales to around £600 million, take on more stock within the core bathroom category and allow Victorian Plumbing to scale in the growth categories of lighting, flooring, tiles and trade, which could more than double its UK total addressable market to over £3.5 billion.
