The Glasgow-headquartered PLC will pay up to £1.25m for the eight-staff business assuming key financial objectives are achieved in the 12-month period post-acquisition.
All eight staff at the distribution company have been transferred over. Branch manager Neil Rodgers will continue to run the 1858sqm site.
The acquisition will allow Macfarlane Group to fill in a geographical gap, chief executive Peter Atkinson told PrintWeek. Previously, Teesside operations were served from Macfarlane’s Newcastle site.
“It is a small infill acquisition to improve our geographical position. It’s important for use to have a location inside the Teesside area. We’re very pleased about it,” he said.
Macfarlane does not plan any major changes to the £3m-turnover business, which designs and distributes packaging on a just-in-time basis to a range of customers in the automotive, food and re-distribution markets.
“It’s a very successful business from our point of view and we are continuing to run with it as it is. We will introduce new products to the range as well as various IT tools. They run a very similar product range to us,” Atkinson said.
He described staff at the site as “a good team of people” and said both they and the location would complement the Macfarlane Packaging Distribution business based in Newcastle and strengthen Macfarlane’s presence in the north east of England.
The other branches of Leicester-based Colton Packaging, a business established in the 1840s as a rope and sack retailer by William Colton, were not for sale.
Atkinson said that the acquisition of One Packaging in August 2015, Lane Packaging in May 2014 and Network Packaging, bought in a £7.5m deal in September 2014 were “performing extremely well, which is exactly what we expected them to do".
The company reported a 10% revenue increase to £169.1m in its preliminary full-year results in February, driven it said by both organic growth and increased sales from its acquisitions.
Its packaging and distribution arm, which represents the majority of the company’s trade, increased sales by 13%, from £126.9m in 2014 to £143m this year, whereas its manufacturing operations revenue fell by 3% from £26.9m in 2014 to £26.1m this year.
Atkinson added: “It’s an encouraging start to the year, the business is continuing to grow nicely. We are looking to do a couple more acquisitions in 2016, geographical infills like some in the Kent area and in Wales.
"We’d like to strengthen our position in Scotland. We have our Glasgow headquarters and a satellite office near Inverness but we’d like to bulk up our Scottish operations.”
Atkinson said the focus on the business remained on hard packaging distribution and internet retail.
The company’s latest kit investment, a Nilpeter flexo label press installed at the end of 2014, is “performing extremely well” Atkinson added.
The company has no plans to invest in more kit at this time. It employs over 750 people at 28 sites, principally in the UK and Ireland.
Macfarlane will pay the initial consideration of £1.05m for the new business and the deferred consideration of £200,000 will be paid from existing borrowing facilities.