Consumer goods brands owner and developer UP Global Sourcing (UPGS) has acquired its first German brand, bagging kitchen electrical brand Petra from PE Outlets B.V. for an undisclosed sum.
The deal isn’t classified as a significant transaction under the listing rules, which partially explains the muted market reaction with the shares off 0.35% to 143.5p, although it could prove very savvy and profitable over time.
Management at UP Global Sourcing, best known as Ultimate Products, hopes the acquisition of its first German brand will ‘further increase our penetration of the German market, where we already have a growing business with strong customer relationships’.
IN NEED OF TLC
Founded in Bavaria in 1968 as a coffee machines maker, Petra has expanded into a broader range of kitchen electrical products.
Though the brand appears to have been a bit unloved in recent years, it remains well known to German consumers and UP Global Sourcing plans to relaunch Petra with a range of electrical kitchen appliances.
The initial focus will be on the vast German market, where the brand has heritage and a strong reputation for quality and design innovation. UP Global Sourcing will then look to expand the label into other territories over time.
SUCCESSFUL BRAND BUILDER
‘Petra is well recognised in the German market with a reputation for quality and design innovation,’ commented chief executive Simon Showman.
‘We will seek to emulate the success of our previous brand acquisitions, most notably Beldray, Progress and Kleeneze, by relaunching Petra with a suite of innovative new products and a dynamic marketing strategy.
‘More broadly, as the first German brand to join the Ultimate Products range, we hope this will further increase our penetration of the German market, where we already have a growing business with strong customer relationships.’
Shore Capital insisted today’s announcement is a further development of UP Global Sourcing’s ‘four pillar growth strategy that is progressively broadening the group’s customer and channel exposure, both in the UK and International markets and so improving the quality of earnings and growth over time.’
The broker sees scope for ‘progressive rating expansion as Ultimate Products’ sales base broadens and improves, whilst continuing to see the potential for forecast upgrades over time.’
For now, Shore Capital is sticking with the forecasts upgraded following a recent positive trading update, estimates calling for pre-tax profits of £10.4 million for the year to August 2021, rising to £11 million for 2022.
Research house Equity Development believes the Petra acquisition is ‘a continuation of a strategy which has turned UP Global Sourcing into a highly successful developer of brands.
‘Petra not only adds to the company’s German offering, but further ahead will enhance the company’s international range of quality and affordable “feel good” household products.
‘Brand management skills remain a key driver of UP Global Sourcing’s ability to continue to grow at a brisk pace in both the online and supermarket channels.’
READ MORE ON UP GLOBAL SOURCING HERE
Issue Date: 15 Feb 2021
