Sat. Oct 16th, 2021

Bunzl PLC Update

The British manufacturer of catering and cleaning products, Bunzl, is planning a spending spree with £ 1 billion in available capital for businesses affected by the pandemic or wanting to sell in the US as a result of President Joe Biden’s proposed tax increases.

Frank van Zanten, CEO of the FTSE 100 group, said merger and acquisition targets opened up after some businesses gained a ‘shocking experience’ in the pandemic, while others in the US feared tax increases.

The Biden administration has proposed an increase in capital gains tax, as well as an increase in corporate tax from 21 per cent to 28 per cent to finance expenditure on childcare, education and infrastructure.

Zanten said the business has room to spend £ 1 billion and follows a database of 1,000 small businesses that want to acquire it.

He said ‘triggers’ to sell include homeowners retiring or a family death, while the possibility of higher U.S. taxes convinces many small family-owned distributors that they need to find buyers for their businesses.

‘There was a lot of activity when Biden announced some possible tax changes. There are people who want to sell their business by the end of the year. ”

He added: ‘As businesses return to the 2019 level, we see a lot of M&A activity coming our way. It was a shocking experience for many people who thought their business was financially secure. ”

So far this year, the business distributor has spent £ 134 million on eight acquisitions.

Zanten gives an outline of the latest developments on the procurement drive, as the company announced before the pandemic that underlying revenue this year will be moderately higher than in 2019.

Sales were boosted by a recovery in demand for products used in offices, hotels and restaurants, which offset a decline in sales of pandemic-related items such as masks, disinfectants and gloves in the first half of 2021.

Despite the persistent demand for hygiene-related products, large government-related bodies are now buying less.

The business last year benefited greatly from the increase in sales and rising prices for personal protective equipment.

Statutory profit before tax increased to £ 276 million in the six months to 30 June, an increase of 12.3 per cent on the first half of last year, while revenue rose to £ 4.8 billion.

The reported gains were also affected between 6% and 8% by the rise of the pound against the dollar.

Shares in the group fell 4 percent to £ 25.83 early on Tuesday afternoon.

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