Coats Group, a U.K.-based manufacturer of industrial yarns, has reached a definitive agreement to acquire Texon, a supplier of components and materials for footwear, accessories and apparel for Nike, Adidas and other brands, for an enterprise value of $237 million and a total cash value of $211 million after deductions and adjustments. The acquisition is expected to be earnings accretive in the first year. It will be funded initially through a bridge financing facility, keeping net leverage within the group’s slated target of 1.0x to 2.0x.
Coats had made some layoffs at its U.K. operations in May and later announced the sale of its business in Brazil and Argentina. Coats currently employs more than 17,000 people on six continents. Sales in 2021 were $1.5 billion. The group is a component of the FTSE 250 and the FTSE4Good Index Series. The company participates in the United Nations Global Compact, is a member of the Ellen MacArthur Foundation, has adopted short-term science-based targets to 2030, and has committed to developing a long-term goal to achieve net-zero emissions by 2050, the highest level of ambition on climate change under the science-based target initiative. The company expects the acquisition of Texon to create annual synergies of approximately $5 million by the end of the second full year of ownership.
As for Texon, an earlier sales attempt in early 2020 failed due to the outbreak of the Covid pandemic. The group is headquartered in the U.K., with manufacturing headquarters in Vietnam and several subsidiaries around the world. Texon focuses on sustainable innovation, providing high-performance, sustainable materials, including heel soles, toe caps and insoles for the premium casual footwear market. Texon’s goal is to produce waste-free by 2025. According to Coats, the company complements its existing footwear business with attractive business opportunities by leveraging Coats’ existing presence.
