Mears Grp PLC - Acquisition of Omega Group
RNS Number : 3459U
Mears Group PLC
15 October 2014
 

 

15th October 2014

Mears Group PLC

("Mears" or "the Group" or "the Company")

Acquisition of Omega Group

 

Mears, the support services group to the Social Housing and Care sectors in the UK, is pleased to announce the acquisition of the Omega Group ("Omega" or "Omega Group") for an initial cash consideration of £20 million. Omega is a leading private sector provider of residential lettings and management services to the Social Housing market, with a portfolio of circa 1,700 properties and a client base of 24 Local Authorities and Housing Associations. The large majority of Omega's customers are based within London. However its most significant recent success has been to become the Social Lettings Agency for Birmingham City Council under a five-year contract to provide lettings, housing management and temporary accommodation services.

The Omega Group comprises:

 

·      Omega Lettings Limited, 100% owned, property lettings

·      Tando Property Services Limited, 50% owned joint venture, property lettings

·      O&T Developments Limited, 50% owned joint venture, property lettings

·      Zenon Property Services Limited, 100% owned, maintenance provider

·      Omega Housing Limited, 100% controlled, Registered Provider (not for profit)

·      Let-to-Birmingham Limited, 100% controlled, property lettings

 

Prior to its acquisition by Mears, Omega was owned and operated by members of the Antoniou family.  The management team will remain with the business.

Rationale for the acquisition

The acquisition of Omega is in line with the Group's strategic aim to continue growing in the evolving Social Housing market; it will add further innovation to Mears' housing management offering and it is sympathetic to our partnership ethos. More specifically, the acquisition is a logical extension to the services provided within our Social Housing division and will add value to our existing customer base.  Moreover, this acquisition will enhance our ability to work more widely with housing providers to improve the delivery of housing and property management services and to increase the supply and management of housing.  Omega has been very successful in developing customer relationships, and Mears' national footprint will offer a wider range of customer relationships for Omega's services.  The acquisition augments the Mears' medium term growth strategy and is anticipated to be earnings enhancing in the year ending 31 December 2015.

Key financial information

The latest audited accounts for Omega Lettings Limited are for the year ended 31 December 2013. The remaining Omega Group companies are entitled to accounting exemptions given their individual sizes and so prepare abbreviated accounts which are unaudited.  The latest unaudited accounts for O&T Developments Limited are for the year to 31 January 2014 and the latest unaudited accounts for the remaining Omega Group companies are for the year ended 31 March 2013.

The aggregate pro-forma financial results extracted from the latest accounts for each of the Omega Group companies reported revenues, profit before tax and gross assets of £15.9m, £2.0m and £7.9m respectively. This reflects a 50% profit contribution and no inclusion of gross assets in respect of Tando Property Services and O&T Developments which will be accounted for using the equity method of accounting going forwards.

Mears expects the transaction to be earnings neutral in the year ending 31 December 2014. Whilst there will be some initial costs of integration, together with the transaction costs already incurred, these will be reported within normal trading and will be funded by Omega profits generated in the period up to the 31 December 2014.  

Acquisition consideration

The initial consideration for the acquisition is £20.0 million in cash funded from Mears' existing banking facilities. The Omega business will be acquired with a normal level of working capital. Additional deferred consideration is payable at a multiple of 6.8 applied to average EBITDA over the 36 month period to 31 October 2017, up to a maximum of £20.0 million, and is payable in instalments across the earn-out period. The deferred consideration will be satisfied using either cash or shares, at the discretion of the Company, with the total consideration capped at £40.0 million.

Commenting on the acquisition, David Miles, Chief Executive of Mears, said:

"We are delighted to announce the completion of the acquisition of Omega. The shortage of safe and secure housing is a significant challenge faced by Mears' clients today. I anticipate Local Authorities having increased responsibility to provide more social homes and remove the reliance upon those private landlords who provide properties which are not of a uniformly high standard. This acquisition is a logical extension to the services provided within our Social Housing division and will enhance our ability to work with housing providers to improve the delivery of housing and property management services.

"I have been impressed by the quality of the Omega Group management team, who appear to have a strong cultural fit with Mears, and I welcome the Omega team to the Mears Group.

"I am excited by the medium term organic growth opportunities that will be facilitated through the development of the Omega business model.  I know that Mears' clients will welcome our involvement to help professionalise this service area whilst being in a position to provide financial stability."

For further information, contact:

 

Mears Group PLC

David Miles, Chief Executive                                                             Tel: +44(0)7778 220 185

Andrew Smith, Finance Director                                                       Tel: +44(0)7712 866 461

Bob Holt, Chairman                                                                            Tel: +44(0)7778 798 816

Alan Long, Executive Director                                                           Tel: +44(0)7979 966 453

www.mearsgroup.co.uk

 

Buchanan

 

Richard Darby/ Sophie McNulty/ Sophie Cowles                         Tel: +44(0)20 7466 5000

www.buchanan.uk.com

 



 

Notes for editors

 

Mears is a leading social housing repairs and maintenance service provider to Local Authorities and Registered Social Landlords in the UK and now commands a leading position in the UK Local Authorities' outsourced care market, providing personal care services to people in their own homes.

Mears employs in excess of 15,000 people and provides maintenance and repairs services to in excess of 10% of the UK social housing stock. Mears also provides care to over 20,000 service users.

 


This information is provided by RNS
The company news service from the
 
END
 
 
ACQEASESFDLLFEF ]]>