China smartphone shipments slumped in June on inventory overhang: Jefferies
LONDON - Coats Group (LON:COA) plc has signed a definitive agreement to acquire OrthoLite Holdings LLC, a global leader in premium insoles, for an initial enterprise value of $770 million, the company announced Wednesday.
The acquisition will be funded through a combination of new debt facilities and proceeds from an equity placing of up to 19.99% of issued share capital. The transaction, which is subject to customary regulatory clearances, is expected to close in the fourth quarter of 2025.
OrthoLite, founded in 1997, holds approximately 36% market share in open-cell foam insoles, supplying over 500 million pairs annually to around 550 brand customers. The company operates 14 production facilities globally and has more than 310 co-branding agreements.
The acquisition represents a multiple of 10.0x EV/EBITDA, reducing to less than 8.0x including $20 million of initial joint annualized cost synergies expected to be delivered by 2028. A contingent payment of up to $10 million is also possible based on OrthoLite’s 2025 EBITDA performance.
"The combination of Coats and OrthoLite is fantastic news for both companies and for the footwear industry," said David Paja, Coats Group Chief Executive. "It brings together two global leaders in adjacent segments of the footwear components sector with a shared vision for innovation and sustainability."
The transaction also includes Cirql, a newly-developed proprietary foam technology targeting the midsole market with biodegradable or recyclable offerings. Cirql is in early commercial development stages with over $30 million invested to date.
According to Coats, the acquisition will strengthen its footwear division, creating a "super tier 2" supplier for footwear components. Based on 2024 results, the enlarged Coats Footwear division would have pro-forma revenues of approximately $700 million.
The company expects the acquisition to be accretive to Group EBIT margins and earnings per share from the first full year, with return on invested capital exceeding weighted average cost of capital by 2028.
Following completion of the equity placing, Coats anticipates pro-forma net leverage of 2.2x by December 2025, falling below 2.0x by the end of 2026.
The announcement was made alongside the company’s 2025 Interim Results.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.