Wed, 13 Apr 2022 | BUSINESS SALE
Preston-based R&G Fluid Power, a distributor of pneumatic, hydraulic and industrial products, has been acquired by London-headquartered listed group Diploma in a deal valued at approximately £100 million.
The reported deal value represents a 2.6x multiple of R&G’s turnover of around £38.4 million for the year ending December 31 2020, on which it registered gross profit of close to £18 million and post-tax profits of £1.3 million.
Over recent years, R&G has embraced a growth strategy encompassing both organic and acquisitive growth. Since commending trading in February 2017, the group has acquired 14 businesses, targeting complementary businesses with existing management teams in the UK’s fluid power industry.
Diploma, an international group of companies which supply specialised tech products and services, said the acquisition formed an “integral part” of its strategy, through which it targets “value-added businesses, with great management teams, to accelerate our organic growth”.
Describing R&G as a “high quality” addition, Diploma said that the group offered significant organic growth potential, such as developing the e-commerce side of its seals sector aftermarket distribution offering in the UK, driving revenue synergies with the existing UK seals business, regional expansion within the UK and product cross-selling.
Diploma adds that R&G has an active pipeline, meaning it is well positioned to to continue delivering acquisitive growth. Overall, Diploma expects R&G to contribute around £65 million in annualised revenue. Post-acquisition, R&G’s existing management team will remain in place.
R&G was advised on the sale by KPMG’s M&A team, led by UK Head of Corporate Finance Jonathan Boyers, alongside Rick Stark, Surinderpal Matharu and Matthew Dearden.
Jonathan Boyers commented: "R&G provide specialist fluid power products to businesses, and use their extensive technical knowledge to understand the needs of their customers."
"They have proven to be highly adept at expanding through strategic buy and build, and this deal represents another example of the attractiveness of businesses that have demonstrated resilience, particularly during challenging times."
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