Smiths News acquires Hedgelane

Smiths News PLC, the UK based wholesaler of newspapers, magazines and books, has acquired Hedgelane Limited whose principal subsidiary trades as The Consortium for Purchasing and Distribution Limited, a UK specialist distributor of consumable products to the educational market, for an aggregate consideration of £38.0m, equivalent to an enterprise value of £44.1m.

The aggregate consideration comprises £32 million of initial cash consideration to be financed through existing available debt facilities, up to £2 million of deferred consideration payable in cash in January 2013 dependent on certain conditions and to be financed through available existing debt facilities, and up to £4 million of deferred consideration payable in Smiths News PLC shares in January 2014 dependent on certain conditions.

The Consortium is a profitable, cash generative business that is expected to add an additional £64 million sales and £7 million EBITDA to Smiths News PLC on a proforma FY12 basis.  The transaction is immediately EPS accretive and will generate returns significantly above the Group’s cost of capital.

UK, Swindon, Wiltshire

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