Funeral group Dignity acquires Yew for 58.3m pounds

FTSE 250 funeral homes group Dignity has conditionally agreed to acquire the entire issued share capital of Yew Holdings for a total cash consideration of 58.3m pounds on a debt-free cash-free basis.

The acquisition - part of Dignity's aggressive growth plan- comprises 40 funeral locations and two crematoria located in the North of England.

In addition to the transaction, the company additionally announced that it had fully underwritten the placing of 2,283,019 new ordinary shares in Dignity to raise approximately £24.2m before expenses.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

This, together with £39.8m of new debt, is expected to be used to fund the acquisition including approximately £2.5m of one-off capital expenditure and all other transaction fees.

Yew is a funeral and crematoria business which operates in the North of England and Dignity intends to sell its own pre-arranged funeral plans through the new Yew branches post completion.

The unaudited financial performance for Yew for the fiscal year 2012 delivered an income of £11.3m and earnings before interest, tax and depreciation (EBITDA) of £5.2m.

In the 39-week period ending September 28th, Dignity generated revenue of £169.4m, up 8.7% from the corresponding period in 2011. Underlying operating profit was also up 10.3% to £53.4m for the same period, compared to £48.4m in the same period in 2011.

Since flotation, Dignity has successfully acquired and integrated 93 funeral locations and 15 crematoria into the group.

MF