Kidderminster-based Victoria, which has been growing through buying other companies in the UK and abroad, is beginning a new partnership with Koch Industries, one of the largest privately held companies in the United States.
Koch has committed to invest the money through convertible preferred shares to be issued by Victoria.
This will enable Victoria to move quickly and decisively to capitalise on fresh mergers and acquisitions opportunities.
It is conditional upon the approval of Victoria’s shareholders.
Koch has also entered into discussions to buy 12.5 million shares in Victoria from one of the group’s existing investors for £43.75 million. This is around 10 per cent of the issued share capital in Victoria.
Victoria has proposed a share buyback of 8,546,095 shares to drive shareholder returns.
Koch was founded in 1940 and is owned by the Koch family which has a net worth of US $100 billion and owns a diverse group of companies, including an interest in segments of the flooring industry in which Victoria does not operate.
In addition to its equity contribution, Koch will bring Victoria expertise and market access.
The directors of Victoria believe that the group has excellent long-term prospects with flooring always needed and continually upgraded and refreshed. They believe Victoria is better placed than many of its competitors to efficiently meet this demand.
Victoria says that the events of the last few months amidst the coronavirus pandemic have revealed some potentially exceptional acquisition possibilities in Europe and the UK to grow Victoria substantially.
There will be will be an initial investment of £75 million by KED Victoria Investments – an affiliate of Koch Equity Development – through preferred shares, which have no voting rights, and at Victoria's option, and for a period of up to 18 months following close of the initial investment, a further investment by KED of up to £100m also through preferred shares.
Victoria was originally established in 1895 and has been a listed company since 1963.
|The group designs, manufactures and distributes a range of carpet, flooring underlay, ceramic tiles, luxury vinyl tile, artificial grass and flooring accessories.
Victoria has operations in the UK, Spain, Italy, Belgium, the Netherlands and Australia and employs approximately 3,400 people across more than 20 sites.
It is the UK's largest carpet manufacturer and the second largest in Australia, as well as the largest manufacturer of underlay in both regions.
Victoria executive chairman Geoff Wilding said: “Victoria’s business model has proven resilient this year during the most difficult trading conditions in living memory. So, the time has now come to again focus on growth and the capital provided by Koch will enable us to deliver significant value creation while maintaining stable and secure debt leverage ratios. I am delighted to bring the capital, resources, and deep industrial expertise of the largest privately held company in the United States to Victoria’s next phase of growth as we execute on the exceptional organic growth and acquisition opportunity ahead.”
Koch equity development managing director, Blake Ressel, added: “We are delighted to be partnering with Victoria. We have conducted due diligence over the last few months, and we are confident in Victoria’s strategy, its management team, and the size of the market opportunity. We expect our investment to help Victoria accelerate execution of its growth plans.”