Acquisition of Shortridge expands K-Bro’s geographic footprint in the UK
EDMONTON, AB, April 30, 2024 /CNW/ – K-Bro Linen Inc. (“K-Bro” or the “Corporation”) (TSX: KBL) announces the acquisition of Shortridge Ltd. (“Shortridge”), a high-quality hospitality laundry provider based in the North West of England, expanding K-Bro’s geographic footprint in the £1.4 billion UK commercial laundry and textile rental market. K-Bro also owns Fishers Laundry Group (“Fishers”), the commercial laundry and textile rental provider covering Scotland and the North East of England, which it acquired in 2017.
Shortridge is being acquired for a consideration of £24.1 million (approximately C$41.2 million), on a cash-free, debt free basis (subject to customary conditions, including certain escrows) and with a further potential earn-out of £2.0 million (approximately C$3.4 million) for achieving certain targets for the 12 months through September 2024. Shortridge’s last twelve months’ revenue for the period ended March 31, 2024 was approximately £12.5 million (approximately C$21.4 million). The transaction includes the freehold and leasehold real estate for Shortridge’s laundry processing facilities. The acquisition is being funded entirely from K-Bro’s recently increased syndicated debt facility and is expected to be accretive to the Corporation.
Shortridge is headquartered in North West England, with laundry processing sites in Lillyhall and Dumfries and a distribution centre in Darlington. Shortridge is a long-established and respected laundry company and K-Bro plans to retain its branding. Its experienced management team will remain with the business and K-Bro intends to retain Shortridge’s employees across its three sites.
Linda McCurdy, President and Chief Executive Officer of K-Bro, said:
“While our original plans to grow our presence in the UK were interrupted by the Covid pandemic, we have stayed on the alert for further growth opportunities in the UK, and I am excited by the potential that this acquisition presents for us and for Shortridge’s customers. We share the same values as Shortridge, so the cultural fit is strong and the business has found a good home as part of the K-Bro family.
“This is a great opportunity for us to diversify our customer base in the UK and to position our combined UK business for more growth as we look to extend K-Bro’s geographic reach further south into the UK.”
Peter Semple, Shortridge Business Director, said:
“This is a good news story for Shortridge and our customers as we join the K-Bro family with the resources and the vision to help us grow the business further while continuing to look after the interests of our valued customer base. K-Bro’s experience, coupled with Fishers’ strong reputation and track record here in the UK, make for a formidable team and we can look forward to an exciting future together.”
Transaction Highlights
- High-Quality Operator: Shortridge is a prestigious commercial laundry operator with a reputation for serving the needs of its customers well and represents the addition of a second, highly recognisable local brand in the UK for K-Bro.
- Adjacent Geographic Footprint: Two strategically located processing facilities and one distribution depot expand K-Bro’s geographic footprint into the North West of England.
- Highly Diversified Customer Base: Shortridge services over 1,200 hospitality customers, including many local, independent businesses, with no customer representing more than 3% of revenue.
- Experienced Management and Shared Values: The experienced management team at Shortridge has significant industry experience and both K-Bro and Shortridge have shared values in ‘putting people first’, prioritising customers, employees and all stakeholders.
- Well-Positioned for Growth: Shortridge has attractive organic growth opportunities and K-Bro’s vision includes supporting both existing and new customers. The acquisition creates a foundation to extend both Shortridge’s and Fishers’ services further south into the UK while remaining vigilant for further acquisitive growth opportunities elsewhere in the UK.
Transaction Financing
The acquisition is being funded entirely from K-Bro’s credit facility. K-Bro is committed to maintaining a flexible capital structure to support future acquisition and organic growth.
Legal Counsel
Burness Paull LLP and Stikeman Elliott LLP are acting as legal advisors to K-Bro.
