A fast-growing manufacturing and retail group has announced the acquisition of a vaping manufacturer in a deal which could be worth almost £15m.
Manchester-headquartered Supreme, which is listed on AIM, has agreed to buy Liberty Flights Holdings Limited which is best known for its Liberty Flights vaping brand and the Dot Pro device.
Founded in 2010, Darwen-based Liberty Flights specialises in premium e-liquid and high-quality vaping devices, alongside distributing a large catalogue of global third-party e-liquid brands.
For the year ended January 31, 2021, Liberty Flights generated a revenue of approximately £9m and an EBITDA of £1.5m.
Liberty Flights is expected to operate as a standalone entity for an initial 12-month period before being fully integrated into Supreme.
Supreme manufactures and imports vaping products, batteries, lighting, wellness and sports nutrition products and sells its wares in the likes of B&M, Poundland, Home Bargains and The Range.
The deal will see Supreme Imports Limited, a subsidiary of Supreme, acquire 100% of the share capital of Liberty Flights on a cash-free debt-free basis, from its three shareholders, Matthew Moden, Christopher Parker and Abraham Spain, for a total consideration of up to £14.75m, which will be funded from the company's newly-established rolling credit facility with HSBC.
The total consideration comprises an £7.75m cash payment on completion of the acquisition, a £2m deferred payment (payable in 12 months) and an earn-out to be paid based on performance over a one-year period, subject to certain stretched performance metrics being met post the acquisition, of up to £5m.
Supreme added that under current performance expectations, management estimate this will be approximately £2m).
Supreme's chief executive Sandy Chadha said: "We are delighted to be acquiring Liberty Flights, a business I have personally known since its inception and a brand I have long admired.
"The combination of Liberty Flights and Supreme's existing vape offerings couldn't be more aligned and is highly complementary across our respective manufacturing, product, and customer profiles.
"In addition, the acquisition further builds on our significant market reach in the UK, accelerating our product presence in the fast-growing pod system market, a sizeable growth opportunity for Supreme.
"We look forward to welcoming Liberty Flights into the Supreme group and updating shareholders on our progress over the course of the current financial year."
