UPGS acquires UK’s oldest housewares brand

UPGS’s announcement that it is acquiring Salter, the UK’s oldest housewares brand and notable for its scales, is a major positive step. The acquisition not only creates enlarged, outright ownership of a key brand and expands UPGS’s kitchen and bathroom offering, but also establishes a foothold in health & lifestyle. Moreover, the deal appears attractively priced for UPGS shareholders. 

Salter’s impact on UPGS’s shares should be positive for two main reasons. First, the deal itself will result in an increase in FY2022 EPS. Second, it reconfirms the ability of the group’s management to acquire attractive brands at valuations that make sense for its shareholders. Assuming completion, based on a 1.9x target EV/sales ratio and a 20.0x P/E in FY2022 we revise our fair value / share upwards from 200p to 275p.