Lloyds TSB Commercial Finance has completed a £20 million asset based lending (ABL) deal which enabled Smiths News plc to acquire book wholesaler Bertram Group, a former division of the Woolworths group.
Swindon-based Smiths News demerged from WH Smith Group in 2006 and has grown to become the UK’s largest newspaper and magazine distributor, delivering over 59 million publications to 23,000 customers every week.
It has acquired the business and assets of Bertram Group, a leading wholesaler of books to independent, online and multiple retailers. Formally a subsidiary of Woolworths, the company operates from a 180,000 square feet distribution centre in Norwich.
The enlarged firm will have a combined turnover in excess of £1.2 billion and will employ over 4,500 people.
Lloyds TSB Commercial Finance developed a £20 million package of working capital facilities secured against the value of the business’ existing assets to fund the acquisition and increase stock availability post-transaction.
The Asset Based Finance team within law firm Wragge & Co LLP advised Commercial Finance during the process.
Following the deal, management intend to use the enhanced scale, resources and distribution channels of the enlarged company to maximise cross selling opportunities and drive further growth.
Terry Powell, Director of Business Development at Lloyds TSB Commercial Finance, commented: “This is a highly complementary acquisition which will expand Smiths News’ product and service offering.
“Using our commercial understanding, the ABL facilities were structured to match the needs of the business and designed to provide rapid access to working capital.
“ABL is increasingly demonstrating its suitability to funding complex deals in the current economic climate as it enables companies to secure funding based on the amount, quality and liquidity of its accounts receivable, inventory and fixed assets.”
Mark Cashmore, Chief Executive of Smiths News, said: “We believe this represents an excellent strategic opportunity for Smiths News to broaden our business and to utilise further our specialist distribution skill set in the UK.
“We expect the acquisition to be earnings enhancing in its first full financial year of ownership.
“We believe Smiths News is extremely well placed to move Bertram’s business forward and capitalise on a number of exciting opportunities.
“I look forward to working with Bertram’s excellent management team to ensure the continued strong development of the business.”
Paula Laird, Head of Banking at Wragge & Co LLP, said: “As businesses look for alternative sources of funding in the current economic climate, the asset-based finance industry continues to grow.
“We employed our expertise in asset-based lending to help Lloyds TSB Commercial Finance secure the right solution for the deal.”
6 April 2009