Rawtenstall-based LH Safety is set for significant expansion following an innovative multi-million pound deal which has seen the French listed company Delta Plus Group acquire a significant stake in the business.The transaction, one of the first genuine trade buy-outs (TBOs) seen in the UK, was arranged by Clearwater International with backing from Lloyds TSB.
LH Safety supplies safety footwear to a range of businesses. Delta is a specialist provider of PPE (Personal Protective Equipment) including protective headgear and clothing, and plans to double the Lancashire firm’s turnover over the next four years. Through Delta, LH Safety will benefit from an enhanced UK product offering and access to Europe-wide sales channels for its safety shoes. LH Safety currently has a 12 per cent UK market share for safety footwear and sells 650,000 pairs of shoes and boots a year. Demand within the market has grown year on year since 1999 as a result of new health and safety legislation.
Delta has a turnover of over €140 million. With eight manufacturing sites across the world, including China, India and Morocco, the company employs 500 staff and sells 1,500 different products.
LH will continue as a stand alone firm, operating with a UK board led by current joint managing directors, Gary Smith and Richard Fletcher, who retain a significant minority shareholding. Clearwater International recommended an innovative private equity-type structure which allowed the owners to cash out part of their shareholding but retain a significant minority stake in an independently managed business which would benefit fully from the numerous trading synergies. The Acquisition Finance team within Lloyds TSB Corporate Markets provided all senior debt alongside the bank’s asset-backed lending division, which partly funded the acquisition and has established an ongoing working capital facility.
GARY SMITH, JOINT MANAGING DIRECTOR, LH SAFETY
“Through our international corporate finance network, we were able to find an ideal solution. We discovered that Delta was looking to expand in the UK and the cultures and product offerings of the two businesses were an ideal match.”
As for the trade buy-out structure, it is one Clearwater International certainly sees becoming more widespread. “The deal structure is a marriage between a trade sale and a private equity transaction,” continued Jones.
“It will be particularly attractive to growth driven mid-cap plcs that wish to take a majority stake in another company at relatively low group risk, as the debt provided is independent of the rest of the group.”