# Polypipe Group acquires underfloor heating company Nu-Heat

- Link: https://www.directorstalkinterviews.com/polypipe-group-acquires-underfloor-heating-company-nu-heat/412957756
- Published: 2021-02-02T07:50:42+00:00
- Author: Amilia Stone

**Polypipe Group plc** (LON:PLP), the leading manufacturer of water management and
climate management solutions, has announced its acquisition of Nu-Heat (Holdings)
Limited, the leading supplier of sustainable underfloor heating solutions, air and
ground source heat pumps, and other renewable heating systems, for a total consideration
of £27 million on a cash-free, debt-free basis.

**Key Highlights**

–      Market leading position, complementary to the Group’s existing portfolio 
of brands

–      Solid track record of growth, profitability and good cash flow generation

–    Further expands the Group’s proposition of climate management solutions, with
a fast-growing position in packages involving renewable energy sources and strengthening
the Group’s [sustainability](https://www.directorstalkinterviews.com/sustainability-green-stocks-news)
credentials

–   Creates added value via integration with Nuaire Mechanical Heat and Ventilation
Recovery systems with potential for revenue and cost synergies

–   Consistent with Group focus on segments which provide above-average growth rates
and benefit from sustainability-linked growth drivers

–     Expected to be EPS accretive and deliver returns in excess of the cost of 
capital in the first full financial year of ownership

–      Strong management team, and a focus on technical expertise, with strong cultural
fit

> **Commenting on the acquisition, Martin Payne, Polypipe Chief Executive Officer,
> said:**
> “I am delighted to announce the acquisition of Nu-Heat, which aligns with our 
> key growth drivers, including our focus on low carbon heating and solutions for
> the environmental challenges facing the built environment. This acquisition will
> enable us to further develop our underfloor heating capabilities, and to develop
> new and exciting ways to integrate underfloor heating, heat pumps, and air-based
> climate management systems.  The Nu-Heat team have fantastic technical and application
> knowledge, and I would like to welcome them to the Polypipe Group.”

> **Also commenting on the acquisition, David Roberts, Managing Director of Nu-Heat,
> said:**
> “We are delighted to be joining Polypipe, with which we share a similar culture
> and values. We look forward to being better positioned to deliver more sustainable
> solutions to customers and greater opportunities for our people as part of the
> Polypipe Group.”

**The Nu-Heat Business**

Nu-Heat is based in Honiton, Devon, and was established in 1992. The business has
a strong track record of revenue and earnings growth. Nu-Heat is a UK market leader
in the design and supply of underfloor heating systems. In recent years, the business
has developed a position in the supply of heat pumps and solar heating, to offer
complete heating systems based on renewable energy.  In the last three years, these
renewable solutions have been the fastest-growing part of the portfolio, now accounting
for 23% of total installations. Nu-Heat employs 90 people, primarily involved in
sales, technical support, marketing and distribution.  Nu-Heat was the subject of
a successful MBO backed by Bestport Private Equity and Ethos Partners in May 2017.

The Nu-Heat business has a strong track record of profitability and cashflow generation.
For the twelve months ended 31 December 2020, it generated revenue of £16.0 million
and reported EBITDA of £3.1 million.

**Acquisition rationale**

The acquisition is in line with our strategy of broadening our market reach in climate
management solutions. The Nu-Heat business is consistent with our focus on low or
zero carbon heating as a growth driver and allows us to leverage our existing capabilities
to support growth. The Nu-Heat business is a profitable, cash-generative business
that has product differentiation, IP and expertise to support value-added services.
It is well positioned in the residential sector, driving its mix of growth increasingly
towards renewables. It is complementary to Polypipe’s existing market leading positions
and capabilities. There are opportunities for its technologies to be combined with
Nuaire technologies. The management team will remain with the combined business.

**Terms of Transaction**

The total consideration of £27 million on a cash-free and debt-free, normalised 
working capital basis comprises the entire share capital of Nu-Heat (Holdings) Limited.
The transaction is being funded via existing debt facilities, and total proceeds
are paid on completion. The acquisition is expected to be earnings-accretive in 
the first full year of ownership, and to provide returns in excess of the Group’s
cost of capital.

**Trading Update**

Further to the update announced on 14 December 2020, the Group confirms that trading
continued to recover throughout the end of the month, with underlying operating 
profit for the year ended 31 December 2020 slightly ahead of the previous guidance
of c.£40 million and with this momentum continuing into the new year without any
material impact from the third national lockdown. We have also had continued good
delivery of cashflow, with net debt at c.£30 million at the end of the year.

Polypipe Group plc intends to issue its preliminary full year results on 16^(th)
March 2021.

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