McBride (LSE:MCB), the European manufacturer of private label and contract-manufactured household and hygiene products, has signed long-term contract manufacturing agreements with E.H. Group B.V., trading as Vestacy, the home care company behind Air Wick, Calgon, Cillit Bang and Mortein.
The group will acquire two Vestacy manufacturing sites in Spain and Portugal for nominal consideration under an accompanying share purchase agreement.
The contracts, running five to eight years, cover household products currently made by a third-party supplier, with a focus on laundry, a category McBride has targeted for growth.
Vestacy will fund c.£34m (€40m) of additional equipment over the next two years, while McBride will contribute c.£12m (€14m) in transition and project costs plus c.£5m (€6m) of specific capital expenditure, limiting the Group's upfront capital exposure.
At maturity, the arrangements are expected to generate annualised revenue of £170m from the second half of the 2028 financial year, materially earnings accretive with margins in line with the Group average and EPS growth matching revenue growth.
Net debt is expected to rise by up to £25m at its peak in that period, reflecting capacity investment, working capital and transition costs, funded from existing facilities and operating cash flow.
The deal pushes contract manufacturing's share of Group revenue beyond the 25% target set at McBride's 2024 Capital Markets Day.
"Securing these two manufacturing sites for a nominal consideration, underpinned by long-term, highly visible contract manufacturing agreements, enables us to further expand our European operational footprint," said chief executive Chris Smith.
Completion of the site transfers is expected early in calendar year 2027, with new capacity fully operational early in 2028.
News Intelligence what this means for the company
McBride has secured a five-to-eight-year contract manufacturing deal with Vestacy (E.H. Group B.V., owner of Air Wick and Cillit Bang) covering two acquired factories in Spain and Portugal for nominal cost. The arrangement is expected to deliver £170m in annualised revenue by H2 2028—a 15% lift to Group revenue—with margins in line with McBride's average and EPS growth matching revenue growth, while limiting upfront capital exposure through Vestacy's funding of £34m in equipment.
The deal materially expands McBride's contract manufacturing footprint (pushing it beyond the 25% revenue target set at the 2024 Capital Markets Day) with long-term, visible revenue locked in at acceptable margins, though peak net debt will rise by up to £25m during the 2027–2028 transition period. Completion is not expected until early 2027, with full operational capacity in early 2028, so near-term earnings accretion is limited.
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