Metro Glass buys Australian glass processor

Metro Performance Glass [NZX: MPG] has bought the third largest glass processor in Victoria and New South Wales for $A43.1 million.

The Auckland-based glass processor announced to the NZX this morning it has signed a conditional agreement to buy 100% of shares in Australian Glass Group (Holdings) from interests associated with the Trawalla Group.

AGG was founded in 2008 and has glass processing plants in Melbourne and Sydney, which supply residential and commercial construction projects across Southeast Australia.

The company generates annual sales of about $A45 million and earnings before interest, tax, depreciation and amortisation of about $A8 million.

Most of its sales are from new detached homes and alterations, with limited exposure to the multi-residential dwelling market.

Metro Glass expects the transaction to settle by the end of this month.

Chairman Sir John Goulter says the acquisition represents a significant strategic step for the company, with the Australian glass processing market representing an attractive long-term growth opportunity.

He says the acquisition will be earnings per share accretive for Metro Glass from its first year.

Metro Glass chief executive Nigel Rigby says there is particular opportunity in double glazing for cooler climates like Victoria in the short to medium term.

“Metro Glass produces significantly more double-glazed units week to week than any other player in Australia or New Zealand and has developed considerable manufacturing and distribution core competencies, which combined with our expertise in processing high-performance glass will benefit the AGG business and its customers.”

This acquisition will be fully debt funded. Metro Glass refinanced its existing bank facilities (previously due to expire in July next year) for a three-year term, and total interest bearing liabilities will increase to about $100 million.

The company will incur one-off non-trading costs of about $1 million to complete the transaction, to be expensed in the 2017 financial year.

Metro, which listed on the NZX in July 2014, told the market in May it had made a net profit after tax of $20.5 million in the 12 months to March 31, on sales which grew 10% to $188 million.

No guidance has been given for the first half of 2017.

Its share price is at $1.95, having risen 39% in the past 12 months. 

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