Elis: Closing of the acquisition of a leading player in Mexico

Closing of the acquisition of a leading player in Mexico

Saint-Cloud, July 5, 2022 - Elis, an international multi-service provider, offering textile, hygiene and facility services solutions, which is present in Europe and Latin America, today announces the closing of the acquisition of a century-old business that is a leader in the Mexican market.

Following the initial announcement made on 9 March 2022, the Mexican competition authority have approved the transaction and the acquisition will be consolidated from 1 July 2022.

The acquired company mainly provides flat linen and workwear to clients in the Healthcare market. It operates 11 production sites, 12 distribution centers and a manufacturing workshop. The company employs more than 2,600 employees. In 2021, the revenue was MXN$1,780m (€85m using June 2022 €/MXN$ exchange rate) with EBITDA margin of c. 38% and EBIT margin of c. 18%. The business delivers strong organic revenue growth, driven by the rapid development of the Mexican market. The annual organic revenue growth should be close to 10% in the coming years.

With this acquisition, Elis further develops in Latin America, a geography in which the Group posts strong organic growth.

Elis is acquiring one of the main Mexican players and the only one with a nationwide network
Elis enters its 4th country in the region after Brazil, Colombia, and Chile
Elis has delivered average annual organic revenue growth of +9.4% in the geography since it first entered the region in 2014
Elis has an excellent track record in integrating assets in Latin America with c. 10 acquisitions since 2014

Furthermore, the Mexican economy is solid and stable:

Relatively low inflation (4% per year before the health crisis), and low unemployment (3.5%)
c. 4% annual GDP growth before the pandemic and 2022/2023 forecasts of 2.7% and 2.4% respectively
Strong organic growth potential as outsourcing is currently limited
External growth potential: additional bolt-on opportunities in a fragmented market
Mexican economy strongly correlated with US activity

The total invested amount for the acquisition of 100% of the share capital (which exchange rate has been set in March at 23,6MXN$/€) corresponds to a multiple of 5.0 times 2021 EBITDA and 10.7 times 2021 EBIT. The highly experienced management team will remain to contribute to driving future growth; the transaction includes some potential earn-outs over the 2023-2025 period at lower multiples.

Commenting on the announcement, Xavier Martiré, CEO of Elis, said:

“With this acquisition in Mexico, Elis enters its 4th country in Latin America, a region that is one of the Group’s main growth engines.

In Mexico, Elis becomes the undisputed leader in a high growth market, where competition is particularly fragmented. The acquired company is the only player with national coverage and delivers good profitability, supported by a high-quality asset base.

The acquisition multiples are very attractive and the company acquired will contribute to strengthen Elis’ growth profile in a post-crisis environment where clients need more hygiene, more traceability and a more secure supply chain.”

Contact

Nicolas Buron, Investor Relations Director - Phone: +33 1 75 49 98 30 - nicolas.buron@elis.com

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