Bidvest Acquires Citron Hygiene for 100% Stake, Eyes Major Growth in North America

  • Strategic Acquisition: Bidvest acquires 100% of Citron Hygiene, expanding its global presence in hygiene services.
  • Market Growth: Citron serves 50,000 locations in the USA, Canada, and the UK with 90% recurring revenue.
  • Financial Strength: Bidvest funds the acquisition through its Revolving Credit Facility, leveraging its strong financial position.

Bidvest Group Limited has announced a strategic acquisition. The company will acquire 100% of Citron Hygiene LP. Citron is currently owned by Birch Hill Equity Partners and other investors.

Deal Details

The acquisition requires approval from the UK Competition and Markets Authority (CMA). The CMA’s decision is expected within five months of submission.

Funding the Acquisition

Bidvest will finance the acquisition through its Revolving Credit Facility. Bidvest is moderately geared at 2.0x net debt/EBITDA as of December 31, 2023. The company has significant undrawn and committed borrowing capacity both internationally and in South Africa.

Funding SourceDebt/EBITDA RatioCredit Facility Maturity
Revolving Credit Facility2.0xJune 2027 with a one-year extension

Effective Date

The effective date of the acquisition is expected towards the end of 2024, pending regulatory approval.

Overview of Citron Hygiene

Citron Hygiene provides washroom hygiene products and services. Their operations span the USA, Canada, and the UK.

Company Background

Citron was founded in 1974 and is headquartered in Toronto, Canada. The company serves approximately 50,000 customer locations.

Branch Network

Citron operates seven branches in Canada, four in the USA, and ten in the UK.

CountryNumber of Branches
Canada7
USA4
UK10

Revenue and Customer Base

Citron generates 90% of its revenue from recurring sources. The customer base includes sectors such as manufacturing, hospitality, facilities management, education, commercial, and healthcare.

Market Dynamics

The hygiene services market is resilient with compelling unit economics. Key growth drivers include rising hygiene and safety standards, population growth, urbanization, and period dignity awareness. Legislation in North America mandates free menstrual products in washrooms, further driving growth.

Growth Potential

Bidvest believes Citron’s current revenue is just a fraction of its potential in North America. The total addressable market in Citron’s territories is exponentially larger.

Strategic Rationale

The acquisition aligns with Bidvest’s strategy to expand its international presence in hygiene services. Bidvest aims to enhance its facilities management and the distribution of plumbing and related products.

Key Benefits

Citron meets Bidvest’s growth criteria, providing several strategic advantages:

  • Market Position: Citron is a leading player in Canada and key states in the USA.
  • Management Team: Citron’s senior management has extensive experience in operating service businesses.
  • Revenue Visibility: Annuity income is underpinned by essential services and long average client tenure.
  • Growth Prospects: Citron has scalable platforms in a structurally growing industry, supported by regulation.
  • Returns: Attractive, sustainable returns with strong cash conversion opportunities.

Integration and Synergies

Citron’s service offerings and geographic presence will complement Bidvest’s Services International division. Best practices can be shared, and infrastructure leveraged, enhancing the overall service delivery. Citron’s footprint allows for growth in the USA and optimization in the UK.

Salient Terms of the Acquisition

The acquisition will be made through The Bidvest Group (UK) Plc, a wholly owned subsidiary of Bidvest. Adjustments, if any, will be processed via an adjustment mechanism outlined in the sale-and-purchase agreement.

Conclusion

Bidvest’s acquisition of Citron Hygiene is a strategic move to expand its international presence. The acquisition offers significant growth potential, leveraging Citron’s strong market position and recurring revenue base. The deal is expected to close towards the end of 2024, pending regulatory approval.


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