Founded in 1962, Chatteris, Cambridgeshire-based Suttons supplies customers in the medical, electronics, and industrial sectors throughout England.

Glasgow-headquartered packaging giant Macfarlane said its wholly-owned subsidiary, Macfarlane Group UK Ltd, has acquired 100% of Suttons for a maximum cash consideration of £9m, including an earn-out of up to £2.5m based on agreed profit growth targets over two years.

A further adjustment is due for net assets in excess of £1m with the expected net assets on completion being £5.7m, including £5m of net cash.

The consideration is being financed entirely from the group’s existing £30m bank facility.

The group said the earnings enhancing acquisition is in line with its declared strategy of building its protective packaging business through a combination of organic and acquisitive growth.

There are significant opportunities for both Suttons and Macfarlane to benefit from access to their respective industry expertise, ranges of bespoke protective packaging products, and common supplier base, Macfarlane added.

All 55 Suttons staff, including its two directors, will both remain with the group following the completion of the deal on Friday (3 March). Suttons’ branding will also be retained.

For the year ended 31 March 2022, Suttons generated sales of £7.4m, EBITDA of £1.1m, and pre-tax profit of £0.9m.

In Macfarlane’s preliminary results posted on 23 February for the year ended 31 December 2022, it reported turnover of £290.4m, up from the £264.5m it achieved in its 2021 results, and pre-tax profit of £19.9m, up from the £18.7m figure it recorded for 2021.

Peter Atkinson, chief executive of Macfarlane, said: “Suttons is a profitable, well invested company with an experienced management team that is fully committed to the business going forward. The acquisition is being funded using our existing bank facility and will be earnings enhancing.

“We look forward to working with the team at Suttons to support its continued growth and develop opportunities for us to work together to provide all our customers with a broader portfolio of protective packaging solutions.”

Macfarlane Group now employs over 1,000 people at 37 sites, predominantly in the UK, but also in Ireland, Germany, and the Netherlands. It supplies more than 20,000 customers, mainly in the UK and Europe.

The company’s share price was up by 0.47% at the time of writing just after midday today (6 March) to 107.5p.