UK-based packaging company Macfarlane Group has conditionally agreed to buy Nelsons for Cartons and Packaging (Nelsons) for a maximum of £6.75m.

Subject to certain trading conditions, the deal aims to develop Macfarlane’s packaging distribution business in the protective and shelf ready packaging (SRP) markets in the UK.

The deal has been funded by a £5.8m placement of shares at 58p each, representing a discount of around 4.1% to the closing price on 25 July.

"The addition of Nelsons Packaging to the Macfarlane Group is another significant step forward in our growth strategy."

Macfarlane Group chief executive Peter Atkinson said: "The addition of Nelsons Packaging to the Macfarlane Group is another significant step forward in our growth strategy.

“Nelsons is a high-quality business and in addition to improving the Macfarlane presence in the East Midlands, the Nelson team bring specific expertise in corrugate packaging applications which will be of wider benefit to Macfarlane.”

Located in Leicester, UK, Nelsons has presence across the Midlands region.

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During the financial year ending 31 December 2015, the company recorded revenues of around £7.9m, earnings before interest, taxes, depreciation and amortisation (EBITDA) of around £0.9m and an operating profit of nearly £0.8m.

Following the deal, Nelsons managing director Gary Mason and sales director Mark Bassford will join Macfarlane.

In May, Macfarlane acquired Edward McNeil’s packaging business.

The company currently employs more than 780 people at 29 sites located mainly in the UK and Ireland.