Dealmakers: Taking a liberty

Lancashire’s position as a vaping industry hotspot has been underlined by the acquisition of one of its major manufacturers in a deal which could be worth almost £15m.

Fast growing Manchester-headquartered manufacturing and retail group Supreme, which is listed on AIM, has agreed to buy Liberty Flights Holdings, which is best known for its Liberty Flights vaping brand and the Dot Pro device.

Darwen headquartered Liberty Flights was launched as a family firm in 2009 and specialises in premium e-liquid and high-quality vaping devices, alongside distributing a large catalogue of global third-party e-liquid brands.

Its products are sold largely through convenience retailers, either directly or via wholesalers, as well as through an expanding direct to consumer online footprint.

The business recorded £9m in sales in its most recent accounts and EBITDA of £1.5m. The balance sheet of Liberty Flights also carries property with a market value of £1.3m.

From its east Lancashire base, the company has grown into one of the most respected e-cigarette brands in the UK, with an expanding international presence. It produces its XO range of e-liquids using pharmaceutical grade nicotine and bases.

Supreme is acquiring 100 per cent of Liberty Flights’ share capital on a cash-free debt-free basis from its three shareholders, Matthew Moden, Christopher Parker and Abraham Spain.

The deal, which was announced in late June, is being funded from the company’s newly established rolling credit facility with HSBC. 

It includes a £7.75m upfront payment, a £2m deferred payment, and a further payout based on performance over the next year. This third payment could be as high as £5m but is predicted to be around £2m.

Liberty Flights will continue to trade under its own brand for 12 months before fully integrating into its new parent company. Announcing the deal to the Stock Exchange, Supreme said the acquisition was firmly in line with its strategy to “support a tobacco free UK” by offering both credible and safer alternatives for nicotine consumption.

The acquisition is expected to be immediately earnings enhancing for the enlarged group. Supreme says there is significant product and customer overlap with the potential to enhance margins across the enlarged business.

It currently supplies products across five key categories – batteries, lighting, vaping, sports nutrition and wellness, and branded household consumer goods. The group has more than 3,300 active business accounts with retail customers who manage over 10,000 branded retail outlets. Customers include B&M, Home Bargains, Poundland, The Range, Sports Direct, Londis, Spar, Costcutter, Asda, Halfords and Iceland.

Sandy Chadha, Supreme chief executive, says: “We are delighted to be acquiring Liberty Flights, a business I have personally known since its inception and a brand I have long admired.

“The combination of Liberty Flights and Supreme’s existing vape offerings couldn’t be more aligned and is highly complementary across our respective manufacturing, product, and customer profiles.

“In addition, the acquisition further builds on our significant market reach in the UK, accelerating our product presence in the fast-growing pod system market, a sizeable growth opportunity for Supreme.”

Liberty Flights managing director Matthew Moden says the deal also opens up opportunities. He says: “Joining a bigger parent group not only creates new opportunities for us to stay ahead in the highly competitive UK vaping market, but also opens up career paths for our employees, and gives customers access to an enhanced product range.

“We are all excited to be starting a new chapter and look forward to working with Supreme’s excellent management team, who really reflect our open and ethical approach to business We are excited to explore the opportunities within the Supreme group.”

Lancashire’s vaping industry has grown significantly in recent years. It has been at the forefront of the development of the sector, with a number of pioneers of the technology developing their products here.

Today some of the biggest names in vaping are based in the county, including Flavour Warehouse, Totally Wicked and Dinner Lady.

They are part of a successful cluster of businesses that have invested tens of millions of pounds in the area and now employ hundreds of people, exporting their products across the globe.

Blackburn-based Dinner Lady was named Best Vaping Brand in 2022 at the ‘Vapouround’ industry awards this year after securing millions of sales in 115 countries.

It was the second major accolade that the company has received in the last six months, having been recognised for its contribution for innovation and shaping the global $20bn global vape market.

Meanwhile, Acme Vape is investing £5m in upgrading its Preston operation, which is set to create 150 new jobs.

The firm, which manufactures e-liquids and vape products sold under brands including IVG, is currently developing new 80,000 sq ft headquarters in Fulwood.

The site will feature multiple upgraded, automated production facilities, high quality meeting and networking areas, state of the art training facilities with conferencing features and a range of sales and marketing offices.