A Queen’s Award-winning manufacturer of water treatment products which clean, flush, maintain, protect and test residential and commercial heating systems is set to be acquired by a listed group in a £210m deal which provides an exit for mid-market private equity firm LDC.
Established in 2003, ADEY’s products help protect against magnetite and other performance issues in water-based heating systems, improve energy efficiency and extend boiler life. The business also provides advanced water testing services from its UKAS-accredited laboratories.
Polypipe Group, a provider of water and climate management systems for the built environment, has entered into an agreement to acquire London Topco Ltd (ADEY) from LDC and other existing ADEY shareholders.
LDC invested in ADEY in June 2016 – in a transaction which won Deal of the Year at the South West Dealmakers Awards – to support domestic and international expansion. During a four-and-a-half-year partnership, the business has grown net revenues from £34m (FY15) to £51m for the year ending 31 December 2020.
With LDC’s support, ADEY invested heavily in product development and, in an industry first, launched a next generation universal water testing kit which provides lab-style reporting and interpretation instantly to a smartphone. The business also strengthened its commercial water-testing service through its acquisition of Alpha Scientific in 2019 and added additional sites including a new satellite lab in Manchester. ADEY also opened a new purpose-built, 44,000 sq. ft manufacturing and distribution facility in Gloucestershire.
In 2017, ADEY was awarded the Queen’s Award for Enterprise in International Trade for a third time. The consideration will be funded via a combination of Polypipe’s existing debt facilities and the proceeds of an equity placing.
ADEY chief executive Matthew Webber, said: “We are excited to be joining Polypipe and by the growth opportunities ahead. The companies share a similar culture and philosophy, focused on delivering sustainable water and climate management solutions. The combined business will allow us better to serve our customers, which will continue to be the foundation for our future success.”
The transaction will enable ADEY to further accelerate its international growth as part of Polypipe which manufactures a range of plastic piping systems for heating, plumbing, drainage and ventilation.
Polypipe chief executive Martin Payne, said: “We are delighted to announce the acquisition of ADEY. Polypipe’s strategy is to grow both organically and through carefully selected value-enhancing acquisitions, with a particular focus on sustainability and sectors within climate and water management.
“ADEY is a pioneer and market leader in the residential heating protection market, one of the fastest growing segments of the UK construction market, underpinned by a shift towards more energy-efficient heating systems and regulatory tailwinds. Like Polypipe, it has a strong track record of innovation and new product development, with the acquisition strengthening the proposition for our customers and accelerating Polypipe’s growth.”
Dewi Hughes, head of LDC in the South West, added: “ADEY is at the forefront of its industry and, during our partnership, has further proven its ability to innovate and to scale internationally. The business has the perfect platform and team to press on with its international growth plans as part of a wider group. We wish Matt and the team the very best on the next phase of their exciting journey.”
ADEY and LDC were advised by Rothschild and Osborne Clarke, and transaction support was provided by PwC and OC&C. Management were advised by Deloitte ((Martyn Gregory, Richard Williams, Pete Muldrew) and Squire Patton Boggs.
Moelis & Company UK LLP is acting exclusively for Polypipe as exclusive financial adviser
Deutsche Bank and Numis Securities are acting as joint global coordinator and corporate broker to Polypipe in relation to a connected placing.
Authored by Laurence Kilgannon (https://www.insidermedia.com/news)
