Both sales follow a comprehensive review of the group’s activities by chief executive Stuart Graham, who joined the company in 2002. However, the circumstances of the sales differ. CFO Mike Sutton told LCN that Connacht Court was acquired in 1998, but it never produced the returns the group was looking for. So the company sought to sell the business and quit the Irish market.
Johnson entered the washroom services sector late and it had grown organically and by acquisition.
However, it was felt that although the business could grow further, it would not reach the leading share that the group occupies in its other markets – drycleaning and workwear rental. The chance to sell to PHS, therefore was attractive.
Proceeds from both disposals will be used to reduce borrowings and Mr Graham said that these decisions would benefit the group in both the medium and long term. They were the natural extension of short-term action already seen in 2003.
In a statement issued by PHS after the acquisition, the company said that the Johnson business operated on similar lines to those of its own washroom business and the acquisition extended its customer base to over 107,000. The JWS business would be integrated into the PHS group.
PHS chief executive, Peter Cohen commented: “This acquisition is a very neat strategic fit to our existing washrooms business where we have the critical mass to achieve economies of scale… We believe we can achieve significant operational and margin improvement at JWS within a relatively short time.”
