Qualceram pays £40m for Shires

Bathroom products manufacturer Qualceram will be transformed in size following the £40 million (€50.8 million) acquisition of the British manufacturer of toilet and bathroom products Shires.

Qualceram shares have been suspended pending completion of the deal and shareholder approval, as Shires is a far larger entity than Qualceram, with sales of £50 million sterling (€80 million) compared to Qualceram's €15.5 million last year.

Shires has five manufacturing plants in Britain - two ceramics plants in Stoke, an acrylic plant in Bradford, a shower enclosures plant in Rochdale and a fireclay plant in Darwen. It is understood that Shires, which also has distribution operations in Ireland and Britain, is profitable although the profits are understood to be not much more than the €3.2 million generated by Qualceram in 1999.

Qualceram company secretary Mr Aidan Clince declined to go into detail on the funding of a takeover of a company more than three times its size in terms of turnover, but he said the funding would be a mixture of debt and equity.

Qualceram had a very modest gearing of 12.5 per cent at end 1999, with interest charges covered 34 times by operating profits.

With cash flow of €3.8 million last year, the group has the capacity to gear up substantially for the Shires acquisition without straining its balance sheet unduly.

Debt funding, however, is limited and it is obvious that a substantial number of shares will have to be issued.