Inflexion sells Marley for 3.5x, 58% IRR

According to a statement from Marshalls, the acquisition will be financed with GBP 371m in cash. This will be generated via a combination of about GBP 187m from a share placing, new debt financing, and 24,092,457 consideration shares, which are expected to be issued to the sellers.

Of these consideration shares, 22,058,824 will be issued to Inflexion, meaning that it will hold a minority stake in Marshalls following the sale of Marley.

Numis and Peel Hunt are acting as joint bookrunners for the capital raise.

Debt financing is being provided in the form of a GBP 210m term loan and a GBP 160m revolving credit facilty from Lloyds, NatWest Markets and National Westminster Bank, according to the statement.

The valuation represents a multiple of 10.7x Marley's underlying 2021 EBITDA, according to the same statement.

Marley had initially attempted an IPO in 2021, announcing its intention to float in September 2021. However, it postponed its IPO in October, citing market conditions, although it said in a statement issued at the time that it had garnered “considerable investor interest”. The company had intended to raise GBP 75m through the IPO and was reportedly expected to be valued at up to GBP 600m.

Inflexion acquired Marley from Belgium-based building materials business Etex in August 2019, investing via Inflexion Buyout Fund V, which held a final close in May 2018 on GBP 1.25bn.

During the investment period, Inflexion assisted Marley with its establishment as a standalone business, the GP said in a statement. This included the formation of an independent IT system, as well as investment in product development and pricing optimisation.

The GP also worked on ESG initiatives, including a 33% reduction in carbon emissions from 2019 to 2021 and ensuring that all of the firm’s production waste is now recycled and the energy used in manicuring is provided by renewable energy sources.

According to Unquote Data, the sale of Marley marks Inflexion's third announced exit of 2022. Its recent exits include the sale of risk management and compliance business Alcumus to Apax Partners in a deal that valued the company at more than GBP 600m and generated returns of 5.9x money. The firm made seven exits in 2021.

Company
Founded in 1924 and headquartered in Burton-on-Trent, Marley produces pitched roof tiles and roof products and systems, including solar panels and cladding.

Marley Group posted 2019 revenues of GBP 143.5m and operating profit of GBP 22m, versus revenues of GBP 172.6m and operating profit of GBP 25.3m in 2021. It had an EBITDA margin of 20% from 2019 to 2021. Marley’s EBITDA doubled during the investment period, Inflexion said in a statement, and its purchase price and entry multiple imply a 2021 EBITDA of GBP 50m.

People
Inflexion – Stuart Robinson, Richard Booth (partners); Adam Moss (assistant director).
Marley – David Speakman (CEO); Dominic Heaton (CFO), Paul Reed (COO).

Advisers
Vendor – Lazard (corporate finance); Travers Smith (legal); PwC (tax).
Acquirer – Rothschild (corporate finance).

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