03:37:52 EDT Fri 21 Jun 2024
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Decisive Dividend Corp
Symbol DE
Shares Issued 19,212,822
Close 2024-04-10 C$ 9.74
Market Cap C$ 187,132,886
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Decisive acquires Techbelt for $6.3-million

2024-04-10 17:36 ET - News Release

Mr. Jeff Schellenberg reports


Decisive Dividend Corp. has acquired Techbelt Ltd. for $6.3-million from arm's-length parties. Techbelt is a manufacturer of polytetrafluoroethylene conveyor belts, PTFE tapes and PTFE materials, which are used in a wide range of end markets, including food and beverage, packaging, textiles, agriculture, and fast-moving consumer goods. Techbelt was founded in 2002 and is located in Huddersfield in the United Kingdom.

Highlights of the acquisition:

  • Fully financed: fully financed through a drawdown on the corporation's syndicated credit facility;
  • Strong business fundamentals: profitable and growing; manufactures consumable products that need to be replaced into less cyclical markets; low-capital-intensity, niche market player with a solid reputation for quality; large addressable market; opportunities for product and geographic expansion;
  • Additional wear-part business servicing new industries: enhances scale in Decisive's wear-part product segment while introducing customers in the food and beverage, textiles, packaging, agriculture, and fast-moving consumer goods markets;
  • Expands portfolio in the United Kingdom: Techbelt is Decisive's second acquisition in the United Kingdom;
  • Earnings growth and accretion: expected to be immediately accretive to Decisive, and represents, on a pro forma basis, an aggregate increase to the corporation's 2023 pro forma sales of 3 per cent, and an increase in adjusted earnings before interest, taxes, depreciation and amortization and adjusted EBITDA per share of 4 per cent.

One of the vendors of Techbelt, Simon Sparkes, has committed to lead Techbelt for at least the next three years. Mr. Sparkes has extensive knowledge of the industry and business, having been with Techbelt since 2006.

Techbelt management believes that its key competitive advantages are its ability to provide technical solutions for customers and its rapid turnaround for delivery of a broad range of products at high specification for markets with compliance and regulatory requirements.

The acquisition is anticipated to be immediately financially accretive to Decisive and is expected to result in an increase in sales, gross profit, profit, adjusted EBITDA and adjusted EBITDA per share. The acquisition is subject to the terms and conditions of a share purchase agreement, which was executed today and provides for a base purchase price of $6.3-million, subject to customary adjustments, plus up to an additional 2.2 million pounds sterling contingent on Techbelt achieving certain earnings targets over the next three years.

On closing, the aggregate $6.3-million base purchase price was paid $5.7-million in cash and $600,000 in common shares. The cash consideration was financed using the corporation's syndicated credit facility. The share consideration was financed through the issuance of 57,879 common shares (representing $600,000 divided by $10.41, being the volume-weighted average trading price of the common shares for the 10-day trading period ended April 9, 2024). Upon completion of this acquisition, Decisive's cumulative acquisition financing mix for the 13 acquisitions it has completed to date remains in line with the corporation's 50/50 long-term debt and equity financing target. The corporation also remains conservatively leveraged with a pro forma senior debt to EBITDA ratio of 1.8 to 1, after debt financing two acquisitions to date in 2024.

Jeff Schellenberg, chief executive officer of Decisive, noted: "We are thrilled to add Techbelt, its leadership team, employees and high-margin wear-part products to our growing portfolio of businesses. Having the opportunity to add another business that sells wear-parts is a great fit for our dividend-paying model and aligns with our strategy of investing in industry verticals we have previously invested in. The customers these wear-parts are sold to operate in the food and beverage, packaging, textiles, agriculture, and fast-moving consumer goods industries, with locations in the United Kingdom, Europe, Asia, Oceania, North and South America, and Africa, further diversifying our cash flow profile and expanding our non-North American revenue base. Finding another set of legacy minded business owners who care deeply about seeing the business they have built carry forward is extremely rewarding for us, and we are pleased to welcome one of the vendors, Simon Sparkes, to our leadership group. Simon has committed to run the business for a minimum of three years, and the continuity that Simon's leadership provides will help maintain the trajectory of growth the business has been on under Simon's leadership, which is a critical piece of this deal to Decisive. We look forward to working with and supporting Simon and the whole Techbelt team to further build the business and take advantage of the market opportunities they have positioned the business for."

Simon Sparkes, managing director of Techbelt, noted: "Myself and the whole Techbelt team are thrilled to be part of the Decisive family. Having spent the last 17 years building a business, it was important that we find the right partner to continue our growth and take us to the next step. I'm passionate about our employees, customers and suppliers. We wanted to find a new owner with aligning values, who will allow us to continue with our own identity whilst providing us with the support and access to markets we have identified as growth opportunities. I look forward to the opportunities that Decisive will provide us in North America. A deeper and more localized access to this market has been a personal aspiration of mine for a number of years, and I'm excited about what the future looks like for Techbelt."

The attached table sets forth the pro forma combined financial information of Decisive, the applicable preacquisition periods for the acquisitions previously completed in 2023 and the acquisition of Techbelt for the trailing 12-month period ended Dec. 31, 2023.

About Decisive Dividend Corp.

Decisive is an acquisition-oriented company, focused on opportunities in manufacturing. The corporation's purpose is to be the sought-out choice for exiting legacy-minded business owners while supporting the long-term success of the businesses acquired, and through that, creating sustainable and growing shareholder returns. The corporation uses a disciplined acquisition strategy to identify already profitable, well-established, high-quality manufacturing companies that have a sustainable competitive advantage, a focus on non-discretionary products, steady cash flows, growth potential and established, strong leadership.

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