Irish-founded firm Sugru is selling up to a German adhesives company.
Mouldable glue company Sugru is being acquired by Tesa, a German adhesives and tapes manufacturer, for approximately £7.6m (€8.6m).
Sugru’s parent company, FormFormForm, is being sold in a deal that will see investors lose up to 90pc of their initial investment, according to The Irish Times.
Tesa to acquire Sugru
FormFormForm was founded by Irish inventor Jane Ní Dhulchaointigh, James Carrigan and Roger Ashby in 2004. Tesa made a formal offer for FormFormForm in March, and 51pc of the company’s shareholders have accepted it. Ní Dhulchaointigh and staff are expected to stay on.
A second round of funding from a £4m debt financing facility with Clydesdale and Yorkshire Bank was pulled back in November of 2017, placing Sugru in a precarious financial situation. Shares are now valued at 9p a piece.
Ní Dhulchaointigh explained that despite building up a major community of users online, reaching more customers through physical store partnerships with the likes of Target in the US and B&Q proved difficult. “It’s been harder and taken longer than anyone imagined,” she said. “We came to a critical juncture at the end of last year. The bank pulled back from a £1.5m in debt financing. It left us very exposed.”
The scale of the challenge was not fully understood
In a note to shareholders, Sugru said: “While the targets in our second crowdfunding raised a little over a year ago were significantly scaled back in line with slower performance than planned, it is now clear that the scale of the challenge was still not fully understood.” In 2015, the business had been valued at £27m during its Crowdcube funding campaign.
The company acknowledged it was a major disappointment for investors, adding that it was not a result anyone expected. While less than half of those who invested through crowdfunding put down less than £100, the average investment was between £1,000 and £2,000, reaching as high as £50,000.
Last year, the firm launched a ‘family-safe’ formulation aimed at children under eight and began selling in Canada and Australia, but the sales rate was not steady enough to ensure targets were hit. Some staff members were also let go in 2016 and assembly was moved to Mexico to slash costs, but these measures were not enough to tackle the underlying problem.
Updated, 11.13am, 21 May 2018: This article was updated to include the figure that Sugru is being sold for in sterling (£7.6m) and to clarify that the second round of funding was worth £4m, not €4m.