Victoria buys Ezi Floor for £6.5m

Shares in AIM-listed floor covering manufacturer Victoria soared as it announced it had bought Bradford-based manufacturer Ezi Floor for £6.5m in order to increase its presence in the underlay sector.

An additional £6.5m will be paid in annual installments dependent on the latter´s performance in terms of its eanings before interest, tax, depreciation and amortisation (EBITDA) over the next four years.

Victoria expects for Ezi Floor to generate EBITDA of about £2.4m for the year ended 31 March 2017, from total net assets acquired of about £5.1m.

The acquisition, which is being being funded from the company's existing cash, is part of its expansions strategy and is expected be immediately earnings enhancing.

Ezi Floor's manufacturing site has room for future expansion and its existing trading relationship with the company is expected to grow while management will remain with the business for a minimum four years.

The company, which made the red carpet for the Duke and Duchess of Cambridge’s wedding, said it does not envisage significant costs arising from the acquisition’s integration into the company.

Chairman Geoff Wilding, said: “We believe underlay to be a real opportunity and Victoria is already actively looking at other opportunities in the underlay sector. Twelve months ago Victoria acquired underlay manufacturer Interfloor.

“Since then, cross-selling opportunities - almost all consumer carpet purchases require underlay - and purchasing improvements as a result of the group's scale have successfully and significantly improved the earnings of that business.”

He added that the integration of previous acquisitions has been completed, and Victoria is already benefiting from its strategy of achieving scale through acquisitions.

Shares in Victoria were up 12.5% to 339.50p at 0905.