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Flowtech Fluidpower Acquires Thomas WrightThorite Group for 350k

flowtech fluidpower acquires thomas wrightthorite group for 350k business manchester

Flowtech Fluidpower, an AIM-listed company based in Skelmersdale, has announced the £350,000 acquisition of Bradford’s Thomas Wright/Thorite Group, which was in administration.

Thomas Wright/Thorite Group, a historical UK leader in pneumatics, compressed air, vacuum, and fluid-handling products and systems, had traded since 1850 and operated from seven sales and service centres across the UK.

The acquisition by Flowtech Fluidpower is strategically significant due to potential synergies between the businesses. Benefits include operational efficiencies, procurement leverage opportunities, and economies of scale leading to notable cost savings and improved margins for the group over the medium term. Additionally, the acquisition offers limited product overlap, which provides expansion prospects into new geographies and complementary product lines within the UK.

Flowtech Fluidpower will acquire all plant and machinery, vehicles, stocks, and intangible assets of Thorite for a total cash consideration of £350,000, funded from existing bank facilities. Furthermore, it has repaid Thorite’s outstanding debtor finance facility of approximately £1.7 million, gaining assignment of a debtor book totalling around £2.6 million. This repayment has also been funded from the group’s bank facilities. A sharing arrangement has been established concerning the excess of debtor book recoveries over and above the approximately £1.7 million paid, agreed with Thorite’s administrator.

In the audited accounts for the year ended 31 March 2023, Thorite generated revenue of £21.2 million and an operating profit of £79,000. The gross value of asset classes acquired at the same date was £8.8 million, inclusive of £3.8 million related to the debtor book at that time. However, Thorite experienced cash flow challenges and operating losses due to internal issues and market headwinds, with an estimated operating loss of £1.2 million for the year ending 31 March 2024.

Flowtech Fluidpower’s board expects the strategic benefits and synergies from the acquisition to restore profitability in the first full year of ownership, with associated benefits to group earnings. The company’s CEO, Mike England, expressed his enthusiasm for the acquisition, highlighting Thorite’s expertise in pneumatics, automation, and compressed air capability as aligning perfectly with Flowtech’s strategy of enhancing scale, margin profile, and accelerating market share gains.

Howard Smith and Rick Harrison of Interpath Advisory were appointed joint administrators to Thomas Wright/Thorite Group on 23 August 2024. Following an exploration of sale, refinance, and investment options, it was concluded that a solvent solution was not feasible, leading to the appointment of administrators. Immediately following their appointment, the administrators sold the business and its assets to Flowtech Fluidpower. As part of the transaction, all of the company’s 105 employees transferred to Flowtech.

Howard Smith, managing director at Interpath Advisory, remarked on Thorite’s long-standing reputation for innovation and quality, expressing delight at securing the business’s future and preserving the jobs of its dedicated workforce through the sale to Flowtech.

Sanjay Vidyarthi, research analyst at Panmure Leberum, maintained his target share price and ‘Buy’ call on Flowtech’s stock, noting that while acquisitions were not on the short-term agenda, this opportunity was too advantageous to pass. He emphasised the medium-term benefits from cost savings, cross-selling, and operational leverage that should enhance group margins. Vidyarthi noted that management is focused on integrating the business, with interim results rescheduled to provide more guidance on the deal.

The acquisition of Thomas Wright/Thorite Group by Flowtech Fluidpower represents a strategic move with potential operational and financial benefits. The combination of expertise and resources is anticipated to restore profitability and enhance market presence, reflecting a forward-thinking approach in a challenging market environment.

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