Termination of proposed acquisition of Mylky
Tooru plc has announced the termination of its proposed acquisition of Mylky B.V. The decision was driven by concerns over taking on significant new debt in the current challenging market and geopolitical climate, as well as the potential for excessive dilution if equity were used for the transaction. Furthermore, further due diligence revealed that acquiring Mylky would expose Tooru to unacceptable risks associated with European legislation, given the company's primary UK focus. Consequently, Tooru will concentrate on its existing businesses and seek more directly aligned acquisition opportunities.
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Tooru, an AIM listed company focused on the branded health and wellness sector, announces that it has decided not to progress the proposed acquisition of Mylky B.V ("Mylky"). This decision was based on a number of factors which include the following.
The acquisition structure included a significant level of new debt, and whilst the enlarged Group would have had the appropriate level of cash flow to support this debt, given the difficult market conditions currently prevailing, overlaid with significant geopolitical risk, the Board believes that now is not the right time to take on more debt and increase the Group's leverage. Also, the time taken to put such a facility in place was looking to exceed the expectations of the vendor given the other opportunities that they were being presented with. Furthermore, the use of equity as an alternative would have been too dilutive at the current levels of the Company's equity valuation given the relative size of the proposed acquisition.
In addition, further work highlighted that the acquisition of Mylky would have exposed the Group to the risk of European legislation in relation to the major part of the enlarged business which, on further examination present too high a risk given our expertise which currently is primarily UK focused.
Therefore, for the time being, the Board believes that it is in the best interest of shareholders to continue focusing on the Group's existing businesses where there is significant potential for low-risk growth in the short term whilst, at the same time continuing to look at more directly-aligned acquisitions.
Scott Livingston, CEO, said:
"Whilst we believe that Mylky is an excellent business, current market conditions lead us to believe that now is not quite the right time to take on such a large European business that would have required a significant amount of additional gearing."
Cleaned text: letterheads, contacts and legal notices removed. View the original announcement ↗ · Company filings. Not investment advice.