Protective packaging specialist Macfarlane has acquired UK-based distributor Network Packaging in a £7.5m deal.
The acquisition is in line with the company's strategy to develop its UK packaging distribution business, with Macfarlane to initially pay £4.9m, including £4.3m in cash and the remainder in shares.
The deferred consideration of approximately £2.6m will be paid in two instalments in the final quarters of 2015 and 2016, respectively.
Macfarlane chief executive Peter Atkinson said: "Network Packaging is a successful company and today's acquisition demonstrates our continuing commitment to the strategy of developing our UK packaging distribution business.
Network Packaging recorded an operating profit of £0.8m on turnover of £7.8m in the financial year ending 31 December 2013, while gross and net assets in the audited accounts totalled £3.1m and £0.6m, respectively.
In May, Macfarlane acquired PSD Industrial Holdings, the parent company of specialist distributor Lane Packaging. Between 2006 and 2008, Macfarlane acquired three regional protective packaging specialists and integrated them into its UK network.
Macfarlane said: "In our core packaging distribution business, sales were 4% ahead of 2013. Margins in that division were lower, reflecting a competitive market and despite overheads being held at 2013 levels, operating profit before exceptional items was slightly down on 2013 at £1.5m.
"Our manufacturing operations' operating profit before exceptional items was £0.2m.
"This reflected lower sales in packaging design and manufacture due to the absence of higher-margin project work, which benefited the first half of 2013 and margin erosion in our labels business caused by highly competitive conditions in the UK retail sector."