Coats Group (COA) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of OrthoLite accelerates growth in the footwear segment by combining market leaders in threads and open-cell foam insoles, expanding presence in the high-growth premium insole segment.

• OrthoLite offers unmatched scale, quality, and strategic fit, with significant overlap in customers, routes to market, and operational footprint, enabling cross-selling and innovation.

• The combination creates a leading Tier 2 supplier of critical footwear components with a global footprint, enhanced customer penetration, and aligned go-to-market strategies.

• Deepens relationships with global footwear brands, leveraging complementary operational footprints and co-branding agreements.

• Supports strategy to build a more growth-oriented group and accelerate sustainability in footwear.

Financial terms and conditions

• Acquisition valued at $770 million, with an initial enterprise value representing a 10.0x EV/EBITDA multiple, reducing to under 8.0x post-synergy.

• Additional contingent payment of up to $10 million based on 2025 EBITDA performance.

• Net leverage expected to fall below 2x by end of 2026.

• Transaction is EPS accretive from the first full year and ROIC exceeds WACC by FY28 at the latest.

• OrthoLite's higher growth rates and margins will lead to an update of the financial framework.

Synergies and expected cost savings

• Targeting $20 million in annualized joint cost synergies by 2028, mainly from consolidation of manufacturing footprints.

• Synergies expected to reduce acquisition multiple and leverage operational efficiencies.

• Significant potential for additional revenue synergies through expanded brand access and operational consolidation.

• Detailed planning for execution of cost and sales synergies is underway, with increased confidence in value creation.