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Inspecs Announces Acquisition of Eschenbach

The consideration will be paid wholly in cash on closing.

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(PRESS RELEASE) Inspecs Group — a leading designer, manufacturer and distributor of eyewear frames, announces that it has conditionally agreed to acquire all of the equity interests in Eschenbach Holding GmbH (“Eschenbach”) (the “Acquisition”) for €94.85 million (approximately £84.7 million(1)) (the “Consideration”). The consideration will be paid wholly in cash on closing.

Eschenbach is a leading, global, eyewear supplier headquartered in Nuremberg, Germany. It has two divisions, one focused on designing and distributing glasses frames (the “Eyewear Division”) and one on designing, manufacturing and distributing specialist optics products (the “Optics Division”).

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The Acquisition represents a key strategic step in the Company’s growth as a global, vertically integrated, eyewear firm. Eschenbach’s established presence in the USA and continental Europe (in particular Germany and France) alongside its portfolio of more than 15 ‘in house’ and licensed brands are complementary to Inspecs and will help position the Company as one of the leading eyewear companies in the world.

The Acquisition and associated costs will be funded by way of; (i) a conditional placing to raise gross proceeds of £64 million (the “Placing”) to be announced separately today (the “Placing Announcement”); (ii) $8 million (approximately £6.0 million(2)) drawn down from the Company’s existing bank facility and a further $10 million (approximately £7.5 million(2)) under an accordion facility; and (iii) approximately $15 million (approximately £11.3 million(2)) in cash reserves.

The Inspecs board of directors (the “Board”) believe that the Acquisition will deliver on all of their strategic acquisition objectives (as set out at the time of the Company’s IPO) whilst also being financially compelling for the Company.

Acquisition highlights include:

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  • The Acquisition extends the Company’s presence internationally in key global markets, such as the USA and Germany, through a network of over 250 sales representatives and more than 12 international subsidiaries.
  • The Company’s greater scale post-Acquisition is expected to provide the opportunity for Inspecs to acquire bigger global licences.
  • The Company will be able to utilise its manufacturing expertise in Asia to assist Eschenbach in providing cost synergies going forwards.
  • Eschenbach’s senior management team from both Germany and the USA will join Inspecs, adding a wealth of experience to the leadership team and helping to mitigate risks arising from the integration process.

The Acquisition presents opportunities to deliver innovative business models that broaden the Company’s routes to market and enhance its product offering (e.g. online B2B platform, developing Eschenbach’s insurance business in the USA and providing a complete frame and lens package through integration with the Company’s Norville lens manufacturing facility).

  • For the financial year ended 31 December 2019 Eschenbach generated audited revenues of €143.3 million (approximately $169.2 million(3)) having grown revenue at a compound annual growth rate (“CAGR”) of 5.9% between 2017 and 2019. EBITDA (excluding leasing costs) was €10.3 million (approximately $12.2 million(3)) in 2019 and the business was cash generative.

The Acquisition is expected to be earnings accretive for Inspecs in the financial year ending 31 December 2021 (“FY21”). The Acquisition will represent a substantial transaction under Rule 12 of the AIM Rules for Companies.

Robin Totterman, Inspecs CEO, commented, “We are delighted to have agreed to acquire Eschenbach, Germany’s no.1 eyewear company which in turn owns one of the leading eyewear companies in the USA, Tura. As a high-quality business with a strong management team and track record of margin-accretive growth, Eschenbach represents the ideal fit for Inspecs. Moreover, it will enable the Group to penetrate key global markets, broaden our customer reach, strengthen our brand portfolio and capitalise on the compelling structural opportunities that exist in the fragmented global eyewear market.

“By adding to the Group’s resilient, vertically integrated business model, this deal expands our global distribution network and brings over 250 salespeople into the Group, propelling Inspecs to a new high by creating one of the largest eyewear companies in the world.

“We look forward to welcoming the Eschenbach team and working together to build on Inspecs’ recent positive trading momentum while accelerating our long term growth and delivering value to our shareholders.”

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