The textiles sector could see more buyouts in the wake of the Salvation Army’s acquisition of its clothing collection contractor Kettering Textiles, according to a senior figure.
The charity paid an initial £2m for Kettering, with up to £10.75m to follow depending on performance. It expects to make £34m pre-tax profit from the acquisition over four years.
Ross Barry, director of LMB Textiles and president of the Textiles Recyclers Association, told MRW further such acquisitions could be on the cards.
“It could lead the way for charities to buy the expertise of collectors. The collectors tend to have the market knowledge and the charities a guaranteed supply. As such, further mergers and acquisitions would seem logical.”
However, he said charities were often risk averse, and asked whether SATCoL would have the right “successors in place” to move the organisation in the directions required as local authorities move away from charity used clothing banks.
Another sector insider suggested the future for commercial operators may be less than certain.
The source said: “Volumes are down for collectors due to new emerging recycling styles such as cash-for-clothes.
“Salvation Army is a charity. It does not pay for material; it trades on its charity ‘tug’. However it has been recently publicised that local authorities are now taking value out of this commodity and removing charity bins for commercial operators who offer value.”
He added: “[Kettering Textiles managing director Nigel] Hanger is a shrewd business person, I am sure that he can see the wood for the trees.”
Salvation Army Trading Company (SATCoL) chairman Lt Col Ivor Telfer said: “It has always been part of SATCoL’s strategic thinking to create a long-term, sustainable and dependable income stream. This acquisition gives us that by providing us, in due course, with 100% of the profits from this scheme.”
Hanger said the board had agreed the deal was in the long-term interest of employees, customers and suppliers.