Bidvest to acquire British hygiene business PHS
The hygiene market is resilient and has great growth prospects due to urbanisation and an ageing population, company says
Local industrial conglomerate Bidvest has reached an agreement to purchase PHS, a leading hygiene services provider in the UK and Spain, for £495m (R9.1bn).
“Bidvest believes that the PHS service offering and geographic presence will be complementary to Bidvest’s Services division. Several learnings can be shared, and enhanced, thereby improving the overall service offering. The geographic footprint allows for growth optionality into Europe and further afield,” Bidvest said in a statement on Tuesday.
PHS has a number of attractive features that have piqued Bidvest's interest. They include a competent and experienced management team, annuity-like income from more than 120,000 clients, and strong growth prospects in a “structurally sound industry” which generates good returns.
“The hygiene market is resilient and continues to grow, supported by structural growth drivers such as urbanisation, hygiene and safety standards as well as a growing and ageing population, to name a few,” Bidvest said.
The company will make the acquisition through its UK services division and will use pound-denominated debt to acquire all of the shares in PHS. Once the acquisition is complete, PHS will be debt-free.
The company was carrying £560m at the end of March 2019, which means that its earnings before interest, tax and amortisation of £37.5m for the financial year was extinguished by interest charges of £55m.
Bidvest’s Services division grew its trading profit by 12.5% to R2.2bn for the year ending in June 2019, contributing almost a third of the group’s trading profits.
The acquisition is subject to approval by regulatory authorities in the UK, and will require a nod from the SA Reserve Bank.
PHS is owned by Anchorage Capital Group, a private equity firm based in New York. The transaction is classified as a category two transaction, meaning it will not require shareholder approval. It is expected to be completed by the second half of 2020.