DCC, the industrial holding company, has agreed to acquire BM Browne (Brownes), a leading supplier of laboratory equipment and other hospital consumables, for £14.9 million. The consideration is payable in cash and/ or loan stock and through the issue of new shares amounting to 25 per cent of the enlarged share capital of Fannin, a wholly owned subsidiary of DCC Healthcare, which is acquiring Brownes. Brownes' equity is 57.5 per cent owned by AIB and Mr Les Auchincloss and 42.5 per cent by the executive team led by managing director, Mr Peter Woods.
Mr Woods who is joining the boards of Fannin and DCC Healthcare, will along with other members of the Brownes management team, take up the 25 per cent stake in the enlarged group. This 25 per cent shareholding will be subject to put and call options, exercisable by DCC, and the Browne executives, over a four year period from 1999 to 2003, at a price based on a multiple of 10 times the previous year's earnings of the enlarged Fannin business. The maximum they can receive is £13.5 million.
Brownes based in Sandyford, Dublin, employs 119. It has two operating divisions; a clinical laboratory division and a medical and surgical division. Both have operations in the Republic, Northern Ireland and Britain. It has enjoyed strong growth over the past few years. Figures disclosed by DCC show a rise in sales from £15.6 million to £20.2 million in the two years to April 1998. Pre-tax profit - excluding non-recurring costs- increased from £1.75 million to £2.82 million over the same period. Net assets amounted to £4.4 million. DCC said growth is continuing this year. The acquisition which is subject to regulatory approval will give DCC Healthcare a "substantial enlarged hospital supply business" with combined revenue of some £40 million, said DCC. "It is intended that the Irish logistics, distribution and administration functions of Fannin and Brownes will be merged in due course".
Mr Jim Flavin, DCC's founder and chief executive, said Brownes is well managed with good growth prospects. The get-together "will produce a stronger platform for the development of a larger business in Britain".
