German agriculture, food and biofuels business Saria has reached an agreement with Moodiesburn-based edible casings company Devro on a cash acquisition of its entire issued share capital.
Under the terms of the deal, Devro shareholders will be entitled to receive 316.1 pence in cash for each share held.
This values the entire issued and to be issued share capital of Devro at approximately £540m on a fully diluted basis, implying an enterprise value of £667m, equivalent to a multiple of 10.9 times enterprise value to earnings before tax for the year ended 30 June 2022.
A statement from the companies stated that the cash consideration represents "an attractive premium" of approximately 65% to the closing price of 192 pence per Devro share on 24 November and 80% to the one month volume weighted average price of 175.9 pence per share on that date.
Saria is a large, family-owned group which can trace its routes back over 40 years and operates from over 200 locations in 26 countries, with more than 10,000 employees. It generated revenue of circa €3bn last year.
Saria stated that it wants to grow Devro and has a track record of integrating and investing in acquisitions, including several in the UK.
Devro' product offering is complementary to Saria’s existing portfolio, particularly in the sausage casings business. The company stated that it plans to undertake a detailed review of Devro's research and development function, with the potential for additional investment.
Crucially, it also intends to maintain and invest in Devro’s seven manufacturing sites, as well as Devro headquarters in Scotland.
Devro's directors, who have been advised by Lazard as to the financial terms of the acquisition, stated that they consider the terms to be fair and reasonable, recommending unanimously that shareholders accept the deal.
Steve Good, chairman of Devro, said: "The board believes that the offer, which represents a premium of 92% to the closing price on the last business day before receipt by the board of Bidco's conditional indicative proposal, reflects the strength of Devro, our medium-term prospects, and recognises the substantial improvements made to the company through the successful implementation of our growth strategy.
"The offer also provides an opportunity for Devro shareholders to crystallise, in cash, the value of their investments at a fair and reasonable value.
"Furthermore, under the ownership of Saria, the combined business will have an enhanced product offering; will be a stronger more diversified group of scale; and will look to further accelerate long-term sustainable growth."
He added: "We believe that Saria's understanding of our markets, its strong financial position and the cultural fit will benefit the group’s business and employees."
Harald van Boxtel, chief executive at Saria, said: "Devro has built a reputation for manufacturing high quality products and providing a service to a customer base that is complementary to the Saria group's.
"The combined businesses would be ideally placed to capture growth in both mature and emerging markets by maximising the combined sales and distribution platform, an improved research and development function and a wider range of products.
"We are excited by the opportunity to invest further in Devro's facilities and team over the long term and deliver a range of benefits to employees, customers and suppliers alike."
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