£127.5m takeover deal lined up for tissue paper and wet wipes business Accrol Group

Operating from five manufacturing sites supplying the UK tissue and wet wipes market, Accrol employs approximately 420 people. It has a prominent position in the UK consumer private label market segment.

An offer of 38 pence per share has been received and recommended from Navigator Paper UK, a subsidiary of Euronext Lisbon-listed The Navigator Company.

Looking at the background to and reasons for their recommendation, Accrol's board highlighted how the company's share price has generally been weak since late 2018, with the significant turnaround in the business not resulting in a sustained recovery.

Accrol is also a manufacturer of scale with a business model of converting tissue for the private label market, but is not integrated into the manufacturing of tissue paper in the UK.

The group's largest competitors, including Kimberly Clark, Essity, Wepa and Sofidel, are all vertically integrated into the manufacturing of tissue paper production.

As part of a larger integrated group, with paper and pulp making capacity, it would allow Accrol to continue to improve and maintain margins and win larger wallet share from the largest UK retailers.

Gareth Jenkins, chief executive of Accrol, said: "Accrol has undergone a period of significant transformation and growth over the last four years, investing in fully automating its tissue converting operations to enhance manufacturing capabilities.

"I am proud and grateful to the efforts and commitment of our people. We have grown to become a leading manufacturer of private label, own branded and licensed tissue products to the UK market and have developed broad retail relationships and a robust supply model that enables us to produce great quality and value products.

"Combining with the Navigator Group brings together a highly complementary product offering. It will enable Accrol to benefit from the capabilities, scale, network and resources of Navigator, building on the strategic progress we have made to date."

António Redondo, chief executive of Navigator, added: "The prospective acquisition of Accrol, a renowned tissue manufacturer based in the UK, marks a pivotal moment for Navigator, as we expand our commercial footprint to the UK tissue market.

"The proposed acquisition is perfectly aligned with our long-term growth strategy for the tissue business and underscores our unwavering commitment to driving innovation, sustainable growth, and operational excellence at Navigator.

"Accrol brings an outstanding business franchise, including an exceptional customer base, highly skilled employees, and a solid track record of producing quality tissue products.

"We are excited to integrate Accrol assets, competences, and talented team into our organization, aiming at solidifying our position as a reference player in the UK tissue industry and establishing our presence in the UK market over the long term."

Rothschild & Co is acting as financial adviser to  Navigator Paper UK.

Stifel is lead financial adviser to Accrol with Zeus acting as joint financial adviser and nominated adviser.

Eversheds Sutherland is retained as legal adviser to the wider Navigator Group.

Addleshaw Goddard (AG) is retained as legal adviser to Accrol. The AG team is led by partner Roger Hart and includes Paul Keohane, Lucie Walker, Sarah Randall and Eleanor Chatterton.