Carpets group buys rugs division for £117m

The acquisition of the Rugs and UK carpet divisions of Balta Group marks the fast-growing group's move into the growing flooring category of rugs

It also takes in the UK polypropylene carpet and non-woven carpet businesses of Balta.

The acquisition can be funded entirely from the company’s existing financial resources, but the board has taken the opportunity to conclude a firm commitment for a further preferred equity investment of £150m with KED Victoria Investments, an affiliate of Koch Equity Development, on improved terms to support further growth in due course.

Completion of the acquisition is subject to the conclusion of the carve-out of the divisions from the rest of the Balta Group and is expected in April next year.

Victoria says the acquisition will be immediately earnings-accretive and is a continued step in its strategy of growing its business with earnings-enhancing acquisitions, and then driving further increases in margin and revenue.

The board believes that the acquisition is an excellent strategic fit with Victoria’s existing business.

Balta Group, established in 1964 in Belgium, has several operating businesses across different sectors of the commercial and residential flooring industry.

Balta has announced that it decided to sell the divisions to Victoria to refocus their activities on their commercial flooring business.

The rugs division, which had revenue of £155m in 2020, manufactures and distributes mechanically woven rugs, which are sold in more than 100 countries across the world. It is the leading producer in Europe

It has state-of-the-art manufacturing facilities in Belgium and Turkey, along with distribution warehouses in Belgium and the United States

The Balta brand will be carried forward by Victoria.

Philippe Hamers, group chief executive of Victoria, said: “This selective acquisition of two highly complementary businesses will be significantly value creating for Victoria’s shareholders. The rugs division has been hugely successful over many years and there are very material operating synergies between the carpet division and Victoria’s existing business. These are both businesses that Victoria already knows extremely well.”

Geoff Wilding, Victoria's executive chairman, added: “Victoria has spent time building a high-quality operational management team with depth and commitment. They have been successful at increasing the operating margin of the Group’s UK carpet division from five to 18 per cent through steady productivity gains and improved customer service. Consequently, Victoria’s management team are now laser-focused on execution of our detailed plans for each of the recently announced acquisitions, and I am certain they will achieve similar gains as the businesses are integrated.

"Victoria is a highly disciplined buyer and, upon completion of this acquisition will, this financial year, have invested approximately £370m to add circa £65m of earnings before tax to the group.”