One of Britain’s biggest toilet roll manufacturers Accroll has become the latest company to come into the sights of a foreign rival as it is set to fall into overseas hands after Portugal-based paper and pulp group agreed a £127.5 million takeover bid.
Accrol accounts for 55 per cent of the entire own-label toilet paper market in Britain and also produces its own brands including Softy tissues, Magnum kitchen roll and Little Heroes baby wipes. It makes millions of miles of loo roll in factories at Blackburn and Leicester which are sold as own-label products by almost all major supermarkets like Tesco, Sainsbury, Waitrose, Morrisons, Aldi and Lidl.
According to a report in The Times, Navigator is offering 38p in cash for each Accrol share, a 28.7 per cent premium to the average price of the past six months, and a price recommended by the Accrol board.
The offer also has the backing of Accrol’s 28.7 per cent shareholder Lombard Odier, whose specialist small companies fund manager Rob Giles has been aggressively building a stake in Accrol for months.
Gareth Jenkins, Accrol’s chief executive said, “Combining with the Navigator group brings together a highly complementary product offering. It will enable Accrol to benefit from the capabilities, scale, network and resources of Navigator, building on the strategic progress we have made to date.”
Accrol was founded in 1993 by the Hussain family and floated in 2016. ever since, it has struggled, making repeated profit warnings and resorting to an emergency capital raising.
The Accrol board said that while it was confident it could prosper as an independent company, it was better to be part of Navigator because it would be less exposed to price fluctuations in raw materials. It would also face “challenges” in raising fresh equity to develop its own paper mill.
Accrol competes with branded producers such as Kimberly-Clark, the maker of Andrex, and Essity, whose brands include Cushelle and Velvet, which are vertically integrated.
“While Accrol is able to source jumbo paper reels on the open market, price fluctuations in raw materials can expose the business to significant cost increases and margin volatility,” the company said.
It also said that while the company had achieved a successful turnaround in the past year, that was not being fully reflected in the share price. It said “broader economic and political uncertainty” in the UK was depressing stocks that, like it, trade on Aim, the Alternative Investment Market.
Lisbon-listed Navigator is best known for its high-quality writing paper. It entered the tissue market in 2014 and expanded fast through acquisition. It manages 100,000 hectares of its own forests and produces 1.6 million tonnes of pulp a year. Last year, it made £1.67 billion in revenue.
