Rockpool Acquisitions and European Lingerie Group Deal Insights

Rockpool Acquisitions Moves Towards Significant Acquisition

Rockpool Acquisitions Plc, an innovative Special Purpose Acquisition Company (SPAC) listed on the London Stock Exchange (LON: LSEG), is making headlines with its proposed acquisition of European Lingerie Group AB (ELG AB). This potential deal aims to combine the strengths of both entities and could lead to a re-admission of the merged company to the Main Market.

Understanding European Lingerie Group

Established in 1885, ELG AB has built a solid reputation in the intimate apparel sector, operating under well-known brands such as Felina, Senselle, and Conturelle. With a vertically-integrated production model, ELG manages manufacturing facilities in multiple countries, namely Germany, Hungary, and Latvia. Additionally, the group is involved in supplying quality fabrics to other lingerie producers, expanding its influence through its Lauma fabrics division.

The Acquisition Structure and Financial Aspects

The acquisition represents a strategic move for Rockpool, as they plan to fund the purchase by issuing new ordinary shares, with a valuation set firmly at 10p per share. This figure marks a considerable premium when viewed against ELG's recent mid-market closing price of 2.85p, showcasing the expected value boost of the acquisition.

In terms of performance, ELG AB has seen remarkable financial success, reporting a turnover exceeding €53 million for the year. An adjusted EBITDA of at least €2.1 million reflects the company's ongoing efforts toward profitability and operational improvements.

Future Prospects for Rockpool and ELG AB

This acquisition is not merely an asset transfer; it is also expected to trigger fundraising efforts aimed at bolstering working capital and supporting innovative business initiatives. Both Rockpool and ELG AB have outlined plans for execution, focusing on sustainable growth post-acquisition.

The journey toward finalizing the acquisition includes critical steps such as due diligence and securing regulatory approvals. Rockpool anticipates covering the initial costs associated with the acquisition from their cash reserves, subsequently drawing contributions from ELG as necessary.

Incentives for Rockpool's Founders

In a strategic incentive plan, Rockpool's founders will be eligible for four-year options up to 4% of the fully diluted share capital, priced at 11p per share, along with a cash bonus on the event of readmission, encouraging active involvement in the company’s success.

Exclusive Period and Leadership Insights

The exclusivity period for negotiations regarding this acquisition will conclude by June 30, 2025. During this frame, either party may terminate under specific conditions, emphasizing the importance of a mutually beneficial agreement.

Mike Irvine, co-founder of Rockpool, has voiced strong confidence in the value this acquisition could create for the shareholders of both Rockpool and ELG AB. Additionally, Indrek Rahumaa, CEO of ELG AB, pointed out the strategic advantages this partnership brings, particularly regarding the potential use of Rockpool shares as acquisition currency, which may significantly enhance their business initiatives.

Collaboration with Key Suppliers

Furthermore, the LYCRA Company, a key supplier for ELG AB, expressed enthusiasm for a tighter relationship following the acquisition. This collaboration could lead to improved product lines and innovative offerings in the intimate apparel market.

Frequently Asked Questions

What is the significance of the Rockpool and ELG AB acquisition?

This acquisition aims to enhance market capabilities, broaden brand portfolios, and provide fresh capital for growth initiatives.

How does ELG AB contribute to the deal?

ELG AB brings its heritage in intimate apparel, diverse brand offerings, and established production facilities to the merger.

What are the expected benefits for Rockpool shareholders?

Shareholders can expect value creation through enhanced market positioning and strategic growth initiatives.

What financial figures were reported by ELG AB?

ELG AB reported a turnover exceeding €53 million in 2023, demonstrating solid operational performance.

When is the exclusivity period for the transaction set to end?

The exclusivity period for this transaction is expected to conclude on June 30, 2025, allowing negotiations to either proceed or conclude.

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