The Glasgow-headquartered packaging group said its wholly-owned subsidiary, Macfarlane Group UK Limited, has acquired 100% of Scottish business Pitreavie for a maximum cash consideration of £18m, including an earn-out of up to £4m based on agreed profit growth targets over two years.
A completion adjustment, payable to Macfarlane, is estimated to be £3.4m with net debt inherited of £4m.
The consideration is being financed entirely from Macfarlane’s existing bank facility. The group said it continued to operate well within its recently improved banking facility of £40m and related covenants, which are committed until November 2027.
The earnings-enhancing acquisition was completed on Friday (10 January) and will see all 159 Pitreavie staff retained. There are no plans to change the Pitreavie name.
Founded in 2005, Pitreavie designs, manufactures, and distributes protective packaging, supplying to customers in the food and drink, energy, electronics and industrial sectors, primarily in Scotland.
Its staff work across four locations in Scotland, in Glenrothes, Aberdeen, and two sites in Cumbernauld.
These include a corrugate box manufacturing plant, opened in 2020; a specialist protective packaging manufacturing and assembly facility; a protective packaging distribution business; and a temperature-controlled packaging operation, all supported by in-house design capability.
Macfarlane said the blend of businesses Pitreavie operates complemented both its Distribution and Manufacturing operations.
It added there were “significant opportunities” for the growth of both Pitreavie and Macfarlane through their respective industry expertise, ranges of bespoke protective packaging products, and common supplier base.
Peter Atkinson, chief executive of Macfarlane, said: “Pitreavie is a fast-growing, well-invested company with an experienced management team that is fully committed to the business.
“The acquisition represents a unique and exciting opportunity to grow our business in Scotland and provide in-house supply to our businesses in the North of England.
“We look forward to working with the team at Pitreavie to support its continued growth and develop opportunities for us to work together to provide our customers with a broader portfolio of protective packaging solutions.”
For the year ended 31 December 2024, Pitreavie generated sales of £24.8m, with adjusted EBITDA of £2.5m and adjusted pre-tax profits of £1.3m.
Pitreavie’s senior management team, who Macfarlane said have been instrumental in driving the growth of the business in recent years, will remain with the business post-completion to support the continued growth of both Macfarlane and Pitreavie.
Stephen Heslop, managing director of The Pitreavie Group, commented: “This is an exciting next chapter for the Pitreavie business and, together with my senior management team, I look forward to working with the team at Macfarlane Group to ensure a seamless transition.
“The future looks extremely bright for our staff as part of an enlarged organisation of considerable strength and scale.”
Pitreavie has been owned, invested in and expanded by Joe Diamond and Gordon Delaney since 2005.
Diamond said: “We are immensely proud of all we have achieved under the Pitreavie banner. We knew that the sale of the company had to be to a business with the same expertise, ambition and deep respect for the industry.”
Delaney added: “Macfarlane Group is a perfect fit with obvious synergies and we are excited that our employees and customers will have access to such a broad range of packaging solutions going forward.
“We especially want to thank Stephen Heslop and all of our valued employees, across our four sites, for their work in helping drive the growth story under our ownership. We wish the new venture every success for the future.”
Advisers on the transaction were EY and Burness Paull on the seller side and Wright Johnston and Mackenzie on the buyer side.
Macfarlane Group employs over 1,000 people at 40 sites, principally in the UK, as well as in Ireland, Germany, and the Netherlands.