LONDON (AFX) - Delling Group PLC, the AIM listed marketing support services group, said that in line with its acquisition strategy, it has exchanged contracts to acquire Eckerud Scandinavian Group AB, a privately owned Swedish exhibition company, for an initial 1.5 mln stg.
Completion is expected by the end of the month.
Delling said the purchase substantially increases its presence in this area, which has historically represented around 10 pct of group turnover.
The initial 1.5 mln stg payable is equivalent to 5.6 times Eckerud's anticipated pretax profit for the year ended Dec 31 2006. An earn-out is also payable subject to a maximum of 4 mln stg. Up to 20 pct of the earn out can be paid in shares, at Delling's option.
Delling also said it is funding the purchase with cash and a combination of the proceeds of a new issue of shares and 1 mln stg of loan notes.
Delling Group will issue 11,897,436 shares at 9.75 pence. The shares have been placed with Scandinavian investors, including 4,102,564 shares to Bjart Dysthe. After the placing Dysthe, already a substantial shareholder in the company, will hold 40,626,481 shares, representing 27.2 pct.
The loan notes have been issued to RAB Capital, and, as a commitment fee, Delling has issued 2 mln shares to RAB at 9.5 pence per share. The loan is intended to be short term in nature whilst it arranges longer term bank financing, Delling said. However if after three months it has not been repaid RAB may then charge interest at 10 pct per month, although it is the directors' intention to fully repay the loan in cash at the end of the three month period.
The share and loan note issue together raise 2.16 mln stg and Delling said it will use the balance after the Eckerud purchase for further acquisitions that are expected to complete shortly.
The board said it views the acquisition of Eckerud as a very important and exciting step in the company's objective to establish Delling as one of the largest companies in its sector in Scandinavia, and it expects to conclude a number of further acquisitions over the coming months.
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