Qualceram, the bathroom products manufacturer, yesterday received shareholder approval for its planned acquisition of British group Shires.

The resolution to approve the acquisition, the placing of new shares to part-fund the deal and a change of name to Qualceram Shires was passed at an extraordinary general meeting in Dublin. Qualceram will pay up to £54 million (€68 million) for Shires in a deal that will increase its turnover by a factor of six to almost £90 million. The deal is all-cash, but Qualceram is funding part of the consideration through a £10 million sterling (€16.4 million) share issue.

A total of 6.98 million new shares is being offered to shareholders on a one-for-two basis at a share price of £1.45 sterling.

"We will have close to 21 million shares in total at a price of £1.45 sterling, so the company's market capitalisation will now be £30 million sterling," said Mr John O'Loughlin, Qualceram's managing director.

Mr O'Loughlin insisted that Qualceram was not in danger of over-reaching itself, although the enlarged group has about £60 million debt.

"It will produce a level of gearing in the enlarged group, but both organisations have strong cash flows and we would expect to alter that gearing percentage in a relatively short period of time," he said.

The Shires acquisition will make Qualceram a significant player in the UK market, as well as the Irish market.

"The UK market will be, in the long term, the main market for growth for Qualceram Shires," said Mr O'Loughlin.

Shires operates on substantially lower margins than Qualceram, an area which will be addressed, says Mr O'Loughlin.

"We will expect to bring efficiencies to the Shires organisation," he said. "It will involve a certain level of redundancies, but these will not be large-scale. "But it will also involve growth and we have identified opportunities for growing the enlarged business, particularly inter-company trading where there is substantial potential for both sides."