Clarkes sell Clarke & Clarke for £42.5m
17 years after founding their eponymous fabric company, Lee and Emma Clarke have sold Clarke & Clarke to Sanderson parent Walker Greenbank for up to £42.5m.
Walker Greenbank is paying £25m up front, with a maximum of £17.5m payable over the next four years depending on company performance. It is issuing £17m of shares, borrowing £5m and using £3m of its cash to pay for the deal.
Clarke & Clarke saw sales climb from £18.1m to £22.4m and 2014 and 2015, with EBITA of £3.8m in 2015.
The company’s fabrics and wallpaper are sold under two distinct retail fabric brands: Clarke & Clarke and Studio G. The Clarke & Clarke brand operates in the mid to value end of its market, and is used predominantly by consumers and interior designers, with many key customers based in the UK. It offers a broad range of contemporary designs across a range of price points, with particular strength in the £20per m - £60 per m price group. In addition to its retail offering, Clarke & Clarke supplies a contemporary range of fabrics for the commercial market. Clarke & Clarke is also one of the few mid-market designers to offer a comprehensive range of contemporary and traditional designs. Studio G, which launched in January 2015, operates at a lower price point to increase Clarke & Clarke's offering for younger customers and to generate higher sales volumes. Operating at the below £20 per me price group, Studio G represents a new target price point for the company.
In 2014, Clarke & Clarke successfully introduced a direct sales model in Ireland, which it is proposing to roll out across other European countries, such as France, Germany and Spain. In the US, it has an exclusive distribution arrangement with Duralee, one of the largest wholesale fabric distributors in the US, selling to a significant number of US customers from 12 corporate showrooms, about 70 agent showrooms and 45 on-the-road sales representatives.
The UK accounts for 54% of sales, the US 18%, Europe 12% and the rest of the world 18%.
Lee Clarke will stay with the company, which will be run as an independent business, once the deal is completed.
Walker Greenbank said the deal would increase the group's scale of operations and accelerate the progression of its market penetration through a broader product offering and customer reach; enhance its international reach, including in the US; strengthen its sourcing expertise and capabilities and increase its buying power; be an opportunity to acquire a standalone business unit which will require limited integration; and provide a opportunity to increase revenue through the enlarged group.
John Sach, Walker Greenbank chief executive said: ‘We are delighted to acquire Clarke & Clarke and to welcome its two brands into our brand portfolio. Clarke & Clarke will add significantly to our product offering, customer base and US presence and also create collaborative opportunities. Clarke & Clarke has a strong track record of growth and its acquisition will be materially enhancing for Walker Greenbank in its first full financial year.’