Hemas acquires 75.1% of Atlas for Rs 5.7 billion

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By 2018-01-21

Hemas Holdings PLC announced in a stock exchange filing that it has acquired 75.1% of Atlas Axillia Co (Pvt) Ltd, the leading school and office brand, for a consideration of Rs 5.7 billion. The existing shareholders of Atlas will retain a stake of 24.9% in the Company post-acquisition.

Atlas will become the third largest business in the Hemas Group and will operate independently as a subsidiary of Hemas Holdings PLC. A-Sec Capital (Pvt) Ltd, the investment banking affiliate of Asia Securities (Pvt) Ltd, acted as arranger and sole advisor to the Seller on this transaction.

Atlas Axillia Co., formerly known as Ceylon Pencil Company (Pvt) Ltd. was founded in 1959 by the Madanayake Family. The Company is the market leader in school stationery and notebooks, pens, pencils and colour products, with products retailed in over 70,000 outlets across Sri Lanka. The Company employs 1,300 people and operates two production facilities at Peliyagoda and Kerawalapitiya. Hemas Holdings PLC, founded in 1948 is a Consumer and Healthcare business with further interests in Leisure and Mobility.
Hemas said it aims to continue to drive Atlas' track record of sales growth and strengthen its market leading position, highly effective lean manufacturing and enviable dividend track record. The Group will cross-fertilize brand and marketing insights between the business and its Home and Personal care portfolio as well as deliver the route to market excellence through two significant islandwide sales and distribution networks. In addition, Hemas will look to reduce funding costs and enhance talent attraction and development at Atlas.

Atlas Axillia Co, MD Nirmal Madanayake said, "Atlas Axillia is on a great journey of growth and we were keen to take our organization to the next level. We went through a rigorous process to find the right partner and we saw a great business and cultural fit with Hemas. Both our organizations have a rich history of bringing loved brands to Sri Lankan homes and have served the Sri Lankan consumer with high quality, affordable and innovative products. Both Atlas and Hemas have always felt that our most valuable asset is our team and we strive to empower the people in our organization. I am deeply proud of the Atlas journey over the past 58 years and of the place that this brand holds in Sri Lankan consumers' hearts. As we embark on the next phase of growth, we are delighted to have a high quality partner with similar values."

"Hemas Holdings PLC is expanding its presence in the Sri Lankan consumer market by acquiring one of the most respected local brands with market leading positions for its notebooks, pens, pencils and colour products. Today's consumers seek premium, innovative and design-oriented products and Atlas has demonstrated its ability to do this repeatedly, resulting in its unique position as the most loved School &Office brand" said, Hemas Holdings PLC Group CEO, Steven Enderby. "Consumer stationery is a new and exciting category for Hemas with significant potential and we will bring the best of our consumer-focussed mindset to deliver superior value to Atlas' many customers across the island. We look forward to working closely with the team at Atlas and building on their considerable success."

In April 2015 Hemas announced a Rights issue of Rs 4.1 billion to be invested in FMCG and Healthcare businesses. Hemas said that during the first quarter of 2017, it allocated Rs 1.45 billion for the construction of the new Morison PLC pharmaceutical plant. The entire proceeds from the Rights issue have now been utilized with the acquisition of Atlas Axillia.

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