UK-based protective packaging materials distributor Macfarlane Group has agreed to acquire Leyland Packaging for a total of £3.25m ($3.89m).

The deal complements Macfarlane’s strategy to establish its business through a combination of organic and acquisitive growth.

The initial payment of £2.25m will be transferred on 5 September. It includes £2m in cash and the remaining £250,000 in the form of 264,382 ordinary shares in Macfarlane for 25p each.

Macfarlane will pay the deferred consideration of up to £1m in cash in the fourth quarter of 2020. This part of the payment is based on meeting certain trading targets.

Leyland Packaging has 37,000ft² facilities in Leyland, Lancashire, UK. The company offers protective packaging solutions to various industrial customers.

Macfarlane Group chief executive Peter Atkinson said: “Leyland is a high-quality protective packaging business that meets our acquisition criteria and will be earnings-enhancing in its first full year in the group.

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“I am confident that the business will be another good acquisition for Macfarlane, improving our geographic coverage in the North-West of England and extending our customer reach.”

Following the completion of the transaction, Macfarlane will retain the 12 employees, currently working with Leyland Packaging.

Macfarlane operates 30 facilities across the UK, Ireland, and Sweden, and employs 925 people across its operations.

In May, Macfarlane Group UK acquired protective packaging distribution business Ecopac UK for £3.9m.