HSBC Private Equity has sold Caradon Bathrooms to Sanitec, a Finnish designer and manufacturer of bathroom ceramics for £82m. The acquisition was made on a cash and debt free basis. The purchase price is adjustable if the net assets of Caradon exceed or fall short of £48.7m. The acquisition will result in £33.3m of goodwill to be amortized over 20 years.
Sanitec's strategic goal is to strengthen its position in ceramics and bath and shower products in Europe. Caradon Bathrooms manufactures bathroom ceramics in the UK trading under brand names Twyford, Doulton and Royal Doulton. 87 per cent of sales are made to the UK market, with the remainder in export markets such as the Middle East, Africa and Asia/Pacific. The company currently employs more than 950 people.
Berndt Brunow, President and CEO of Sanitec Corporation, said: “This is a logical step in Sanitec’s strategy. Caradon is a quality player that is increasing its market share in an important market. Twyford, Doulton and Royal Doulton are strong quality brands with a lot of potential”.
In 2000, Caradon Bathrooms achieved sales of about £79m and the pro forma EBIT margin on a standalone basis is estimated at 8.8 per cent. Caradon Bathrooms is currently dependent on sales, marketing, IT and distribution functions provided to all four Caradon plumbing businesses by Caradon Plumbing Solutions (CPS). Sanitec expects that after the separation of Bathrooms from Caradon Plumbing, profitability will improve as of the second half of the year 2001. The separation will be completed in full by June 2001.
HSBC Private Equity acquired Caradon Bathrooms from Caradon Plc in October 2000 as part of its acquisition of the Caradon Plumbing Division. Total financing to complete that transaction was £496m which was provided through a combination of institutional equity and senior debt and mezzanine facilities arranged by J.P. Morgan Securities.