Fleetwood in $44m acquisitions

Fleetwood Corporation has continued with a major reshaping of its business, announcing two acquisitions on the east coast and a $60 million capital raising, one month after selling its caravan manufacturing business.

It has agreed to pay $34.1 million for Sydney-based Modular Building Systems.

Separately, it has agreed to pay $10 million for Melbourne-based caravan plumbing and electrical services and parts supplier Northern RV.

The vendors of both businesses may qualify for additional payments if they exceed specified earnings targets.

To fund the acquisitions and strengthen its financial position, Fleetwood plans to raise $60 million through Perth broking firm Euroz.

This will comprise a $22 million placement and a $38 million entitlement offer, both priced at $1.80 per share, an 11.8 per cent discount to the last traded price.

Fleetwood managing director Brad Denison said the acquisitions were strategically and financially compelling for Fleetwood.

“MBS takes our manufactured accommodation business into a new geography and an expanding market niche,” he said.

“NRV is a logical bolt-on for (the business), which will drive improved returns and quality of earnings in that business.

“We believe both acquisitions will deliver long-term value to our shareholders.”

MBS has a large and modern facility in western Sydney and is focused primarily on the prisons market.

It is one of two builders on a panel appointed to build modular cells for the NSW government.

Mr Denison said it would also be able to pursue opportunities in the education sector.

Its FY18 revenue was $49.6 million and earnings before interest, taxes and amortisation of $9.4 million before adjustment for likely costs under Fleetwood ownership.

Hence, the acquisition price equated to 3.6 times Ebita.

NRV’s core offering centres on providing plumbing and electrical labour and parts to the production lines of mid-tier caravan manufacturers.

It provides plumbing kits and labour to over 6,000 of the 22,000 caravans manufactured annually in Australia.

Secondary revenue streams are derived from repair and warranty services, and retailing RV parts and accessories, from its 2,200 square metre premises in Campbellfield.

NRV’s FY18 revenue was $15.7 million and Ebita was $4.7 million before adjustments, equating to an acquisition multiple of 2.1 times.

Clayton Utz was legal adviser to Fleetwood.