Victoria, the international designers, manufacturers and distributors of innovative flooring, will acquire the highly profitable and growing rugs division of Balta Group, the Belgium-based flooring company, along with its profitable UK polypropylene carpet and non-woven carpet businesses, together with the internationally-known brand, ‘Balta’.

The acquisition will be funded entirely from the Company's existing financial resources. However, the board has taken the opportunity to conclude a firm commitment for a further preferred equity investment with KED Victoria Investments, an affiliate of Koch Equity Development.

The Balta brand will be carried forward with its unique selling proposition. The Belgian plant will be added to the Victoria Group manufacturing platform. The acquisition will, consequently, enable Victoria to access a broader range of manufacturing capacity and extend its sales network into new territories.

The purchase price will be funded entirely from the Group's cash balances along with additional preferred equity to be provided by KED, a substantial shareholder in Victoria. Following recent negotiations, the quantum of this follow-on preferred equity has been increased since the original commitment in November 2020, and the pricing has been reduced.

The full integration of the divisions with Victoria's existing manufacturing and distribution operations are expected to drive very material cost synergies, estimated by the board to be more than €15 million over the next 2-3 years, which will create significant value for shareholders.

"This selective acquisition of two highly complementary businesses will be significantly value creating for Victoria's shareholders. The rugs division has been hugely successful over many years and there are very material operating synergies between the carpet division and Victoria's existing business. These are both businesses that Victoria already knows extremely well," Philippe Hamers, group chief executive, Victoria PLC, said.

The rugs division, which had revenues of €182.9 million (£155.0 million) in 2020, manufactures and distributes mechanically woven rugs, which are sold in more than 100 countries across the world.

The non-woven carpets business, which had 2020 revenues of €17.3 million (£14.7 million), manufactures technical products for a wide variety of applications, including automotive, insulation, and carpet backing. It will continue to be managed by its managing director, Franky Viaene, and will be integrated in one of the existing divisions. 

"I am pleased that we have reached this mutually beneficial agreement with Victoria plc. Our Rugs, Residential PP and Non-Woven businesses have found a new owner with a great operational fit. This transaction allows us to focus on our Commercial businesses in Europe and the United States and on our European Residential PA business by investing in sustainability and growth," Cyrille Ragoucy, chief executive officer, Balta Group NV, said.

"Victoria has spent time building a high-quality operational management team with depth and commitment. They have been successful at increasing the operating margin of the Group's UK carpet division from 5 to 18 per cent through steady productivity gains and improved customer service. Consequently, Victoria's management team are now laser-focussed on execution of our detailed plans for each of the recently announced acquisitions, and I am certain they will achieve similar gains as the businesses are integrated,” Geoff Wilding, Executive Chairman, Victoria PLC, said.