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.

• Expands access to a broader customer base, enhances innovation, sustainability, and brand intimacy, and supports a more growth-oriented group.

• Creates a leading Tier 2 supplier with unmatched scale, quality, and a global footprint, deepening relationships with global footwear brands.

• Significant overlap in customers, routes to market, and operational footprint enables cross-selling and innovation.

• Market fragmentation and customer demand for scale and agility support the strategic logic.

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.

Synergies and expected cost savings

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

• Significant potential for additional revenue synergies through expanded brand access and shared customer base.

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

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