Tuesday, May 6, 2014

News: Straight offer from MGB owner

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One51 plc, the Irish owner of Rotherham manufacturer, MGB Plastics, is close to concluding a deal to buy Yorkshire firm, Straight plc.

MGB Plastics is the UK's leading manufacturer of wheeled bins and its Barbot Hall facility has been expanded a number of times and now has the manufacturing capacity of 1.5 million wheeled bins per annum.

Leeds-based Straight has its manufacturing facility in Hull and specialises in kerbside recycling solutions for organic waste and dry recyclables plus containers for hazardous waste and workplace recyclables.

Takeover talks have been ongoing for some time and last week, One51, confirmed a £10.7m bid for the AIM-listed firm with the 78 pence a share offer being recommended for approval by the Straight board.

One51 is aiming to build on the success of MGB Plastics by making complimentary strategic acquisitions in the UK. It believes that the acquisition of Straight would be a good strategic fit and that the combination of MGB and Straight would create a leading specialist injection moulding group in the UK.

The directors of Straight believe that the business will benefit substantially from being part of a larger group that will leverage its existing customer network as well as its product development and branding expertise.

Both manufacturers have recently secured multi-million pound contracts from Birmingham City Council as part of the largest roll-out of bins ever seen in Western Europe. MGB will supply 350,000 bins for general household waste and 380,000 bins for recyclable waste, whilst Straight is supplying 350,000 caddies that will be inserted into the recycling bins, for the collection of paper.

Turnover at Straight was £26.1m last year. Turnover on a like-for-like basis for One51's plastics division was £81.5m in 2013.

The bid, which is financed by a new debt facility for One51, will see the non-exec directors of Straight, and Jonathan Straight, the CEO, exit the company.

Alan Walsh, chief executive of One51 Group, said: "The board of One51 Group look forward to the integration of Straight within its existing plastics division.

"We aim to support Straight in its growth plans by providing the security of a strong balance sheet and continuing to innovate the business model through investment in technology and machinery.

"The combination of One51 and Straight is an exciting opportunity as it adds considerable breadth, depth and scale to One51's existing offering, creating a leading specialist injection moulding group in the UK which can then grow into other European markets."

James Newman, chairman of Straight, added: "The board of Straight is pleased to have agreed terms with One51. We consider that the offer represents an attractive premium to the average share price of Straight in the period prior to the announcement of a potential offer.

"We welcome the opportunity to join One51 which we believe will bring immediate and long term benefits to our clients and staff."

One51 website
Straight plc website

Images: Sterecycle

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