Filta Group agrees £49.2m takeover by Franchise Brands

Macclesfield-based Franchise Brands has agreed to buy kitchen services provider Filta Group Holdings in a deal worth almost £50million.

The multi-franchise business, whose subsidiaries offer services ranging from oven cleaning to commercial drainage, said the newly-enlarged firm would be in a much stronger position to expand and attract interest from investors.

In particular, it believes the £49.2million takeover would help boost its presence in North America, and help Filta grow its UK and European franchise businesses by taking advantage of Franchise Brands’ infrastructure.

The combined group will also augment the range of services it provides to customers, cut operating costs, and enhance its ability to potentially acquire more companies.

Filta shareholders are set to receive 170.7p per share for the deal, a relatively modest increase on the group’s closing share price yesterday but a premium of nearly a quarter on its average closing price in the prior three months.

Approval for the transaction has been granted by Filta directors and other parties who control more than 60 per cent of the firm’s share capital, according to Franchise Brands.

Further approval of the deal has been granted by asset manager Gresham House, which owns almost a fifth of the shares, on the condition that no bid exceeds 10 per cent of the current proposal.

Should the deal be completed, the new company would have a market capitalisation of £191.2million, making it one of the biggest franchise businesses in the UK.

Filta’s chief executive and co-founder Jason Sayers said: ‘Franchise Brands offers an ideal home for our customers, business, talented staff and franchisees.

Subsidiaries: Franchise Brands has seven major brands, such as commercial drainage firm Metro Rod, plumbing franchise Metro Plumb, and dog home-boarding service Barking Mad

‘Our board believes there are greater benefits to be had from the more diversified range of services the larger group will offer, as well as a broader customer base and greater shared resources to support future growth.

‘The share structure of the offer will also allow Filta’s shareholders, alongside our broader stakeholders, to benefit from the significant synergy potential the combination represents.’

Shares in both businesses did not react positively to the deal’s announcement, with Franchise Brands’ share price dropping 3.4 per cent to 142.5p and Filta experiencing a 0.3 per cent decline to £1.58. 

Franchise Brands has seven major brands, including national plumbing franchise Metro Plumb, pump supply, installation and servicing business Willow Pumps, and dog home-boarding service Barking Mad.

The firm achieved record adjusted underlying earnings for the third quarter and first nine months of last year, thanks to surging system sales of franchisees at its commercial drainage specialist Metro Rod.

Warwickshire-based Filta, which is listed on the London Stock Exchange’s AIM market, mainly focuses on cleaning kitchen fryers at public establishments such as amusement parks, fast-food restaurants and sports stadiums. 

Last week, it revealed revenues in 2021 exceeded their pre-pandemic levels on the back of record performances in both the third and fourth quarters and a significant recovery in the North American market.