Diploma acquires PAR Group for £38m

2nd May 2024 08:11

(Sharecast News) - Distribution company Diploma announced the acquisition of PAR Group on Thursday for £38m.

The FTSE 100 company said PAR, a UK-based family-owned firm, specialises in supplying seals and gaskets to diverse end markets.

It said PAR had shown exceptional growth and maintained strong margins over time, with the acquisition positioning it within Diploma's UK aftermarket business in the seals sector, enhancing the scale of R&G's seal and gaskets division.

With annual revenue of around £13m, PAR was expected to be immediately accretive to both margin and earnings per share for the Group.

The board said the investment reflected a multiple of around 7x 2024 EBIT, with returns in the first year surpassing the cost of capital.

Diploma said the acquisition followed its strategic approach since the acquisition of R&G in April 2022, which had seen the addition of eight complementary businesses.

Those additions had contributed to strong organic growth, achieving a compound annual growth rate of around 10%, and facilitated significant margin improvement.

Diploma also said that its acquisition of Peerless Aerospace, announced on 27 March and completed on 1 May, had further expanded its portfolio, with Peerless Aerospace now operating as part of the group.

"I'm delighted to welcome our new PAR colleagues to Diploma, bringing another highly complementary, quality business into the group," said chief executive officer Johnny Thomson.

"PAR has an excellent customer-proposition with clear value-add.

"It's a fantastic addition to R&G: building capability; further diversifying the customer base; and expanding end markets."

At 0814 BST, shares in Diploma were up 1.22% at 3,662p.

Reporting by Josh White for Sharecast.com.