(Reuters) - British plastic and fiber products supplier Filtrona Plc FLTR.L said it would buy compatriot Contego Healthcare Ltd for 160 million pounds ($242 million) in a deal that is expected to add to earnings immediately.
The acquisition will be funded primarily through proceeds from a share placement of about 10 percent of Filtrona’s share capital and from existing debt facilities.
Filtorna said on Tuesday it raised 142.7 million pounds through the sale of 21.2 million shares at 675 pence per share, a premium of 1.9 percent to Monday’s close.
The company’s shares were up 4 percent at 690 pence at 11.15 a.m. ET on the London Stock Exchange.
“The shares are up because people have realized that it’s an earnings-enhancing deal with clear synergy benefits going forward,” Canaccord Genuity analyst Michael O’Brien said.
Filtrona unit FIL International Ltd bought Contego from U.S.-based Platinum Equity.
Contego, which makes cartons, leaflets, self-adhesive labels and printed foils for blister packs for the pharmaceutical and healthcare industries, has 10 manufacturing plants across the UK and Europe.
The takeover is subject to clearance from German competition authorities, which is expected to be completed by mid-April.
Contego’s product portfolio is complementary to Filtrona’s existing packaging business that supplies the pharmaceutical and healthcare markets with items such as labels and tear tape, Filtrona said in a statement.
Contego reported core earnings of 17.9 million pounds on revenue of 102.7 million pounds in the year ended December 31, Filtrona said. Filtrona’s adjusted pretax profit rose to 95.8 million pounds in 2012 from 76.2 million a year earlier. Revenue increased 23 percent to 663.4 million pounds.
Deutsche Bank AG was the lead manager for the placement, which a Filtrona spokeswoman said was taken up by a range of institutional shareholders.
($1 = 0.6619 British pounds)
Reporting by Abhirup Roy in Bangalore; Editing by Maju Samuel