De La Rue plc’s signing a strategic agreement with Epiris Fund II for its paper business


Slaughter and May has advised De La Rue plc on its entry into a strategic agreement with Epiris Fund II (Epiris) in relation to the Group’s paper business, to be named Portals De La Rue Limited.

Under the terms of the agreement, Epiris, together with management, will acquire a 90% shareholding in Portals De La Rue through a newly formed company WhickerCo Limited, for a cash consideration of c£61m payable upon completion. This equates to an enterprise value of £68m and a multiple of 12.8x average adjusted EBIT 2015-18. De La Rue will retain the remaining 10% interest.

De La Rue’s paper business has a capacity of c13,000 tonnes per year which is split approximately equally between internal use and external sales. As part of the transaction, Portals De La Rue will commit to supply pre-agreed volumes of paper to De La Rue with a pre-agreed price mechanism for the next ten years. This will meet most of the Group’s anticipated internal requirements for finished banknotes and security documents. In addition, De La Rue will be Portals De La Rue’s preferred supplier for security features. Following completion, the existing management team of De La Rue’s paper business will remain with Portals De La Rue.

This transaction will limit De La Rue’s exposure to the external paper market, while securing paper supplies and maintaining the Group’s position as the world’s leading integrated banknote supplier. It will also enable the Group to strengthen its balance sheet and to focus on providing innovative technology solutions for the currency, identity and brand protection markets.

In the financial year to March 2018, De La Rue’s paper business is expected to generate sales of c£120m, of which c£50m is intra-group transactions, and an EBIT of c£10m. Following the transaction, De La Rue expects to reduce its ongoing overhead costs by c£4m by FY2019/20.

Slaughter and May supported the De La Rue legal team, which was led by Ed Peppiatt (General Counsel) and Dominic Hickman.

The Slaughter and May corporate team was led by Christian Boney (partner, in picture), assisted by Archi Campbell (associate), Emma Wolf (associate), Jack Wharton (associate) and Alex Cooper (trainee); on Tax law acted Sara Luder (partner) and Stephanie Baxter (associate); on IP / IT matters acted Susie Middlemiss (partner), Matthew Harman (associate) and Alex Clothier (trainee); on Environment law acted Samantha Brady (senior counsel); and on Competition law acted Bertrand Louveaux (partner), Tim Blanchard (associate), Alex Bulfin (associate).

Involved fees earner: Christian Boney – Slaughter and May; Archi Campbell – Slaughter and May; Emma Wolf – Slaughter and May; Jack Wharton – Slaughter and May; Alex Cooper – Slaughter and May; Sara Luder – Slaughter and May; Stephanie Baxter – Slaughter and May; Susie Middlemiss – Slaughter and May; Matthew Harman – Slaughter and May; Alex Clothier – Slaughter and May; Samantha Brady – Slaughter and May; Bertrand Louveaux – Slaughter and May; Tim Blanchard – Slaughter and May; Alex Bulfin – Slaughter and May;

Law Firms: Slaughter and May;

Clients: De La Rue plc;