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Manufacturer and supplier Supreme has agreed to acquire vaping brand Liberty Flights Holdings in a deal that could rise to £14.75 million. The acquisition will involve a £7.75 million initial consideration, a £2 million deferred consideration and up to £5 million in a performance-related earn-out.
If the full £14.75 million figure is reached, the deal value would represent a 9.8x multiple of Lancashire-based Liberty Flights Holdings’ £1.5 million EBITDA for the year ending January 31 2021, generated on revenues of around £9 million.
Liberty Flights Holdings was founded in 2010 and is known for its vaping brand Liberty Flights, as well as the Dot Pro vaping kit range. In addition to producing its own e-liquid and vaping products, the company also sells a wide range of global third-party e-liquid products. It sells mainly via convenience retailers, as well as through its growing direct-to-consumer e-commerce offering.
The deal will see Supreme subsidiary Supreme Imports Ltd acquire 100 per cent of Liberty Flights’ share capital on a cash-free and debt-free basis from the firm’s three current shareholders, Matthew Moden, Christopher Parker and Abraham Spain. The acquisition will be funded through Supreme’s new rolling credit facility with HSBC.
The acquisition of Liberty Flights, which is expected to be immediately earnings enhancing, will bolster Supreme’s existing vaping products offering. The group supplies a wide range of products, including sports nutrition and wellness products, household consumer goods, lighting and batteries.
Post-acquisition, Liberty Flights is set to continue operating as a standalone entity for an initial period of 12 months, prior to being fully integrated into the Supreme group. The acquisition reflects Supreme's strategy of moving into the smoke-free nicotine market, as the UK seeks to become smoke-free by 2030.
Commenting on the deal, Supreme Chief Executive Sandy Chadha said: “The combination of Liberty Flights and Supreme's existing vape offerings couldn't be more aligned and is highly complementary across our respective manufacturing, product, and customer profiles.”
"In addition, the acquisition further builds on our significant market reach in the UK, accelerating our product presence in the fast-growing pod system market, a sizeable growth opportunity for Supreme.”
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