TIDMACL
RNS Number : 5672B
Acal PLC
29 October 2009
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FOR RELEASE 7.00 AM
29 OCTOBER 2009
ACAL PLC ("ACAL")
PROPOSED ACQUISITION OF FINANCIÈRE BFI OPTILAS S.A.S. ("BFI OPTILAS")
Acal is pleased to announce that it has agreed to acquire the entire issued
share capital of BFi OPTiLAS (the "Acquisition"). BFi OPTiLAS is a private
specialised distributor of electronic and photonic components, modules and
systems across Europe, as well as supplying value-added calibration and
maintenance services. BFi OPTiLAS will be acquired for a consideration of EUR10
million payable in cash and 2 million Acal ordinary shares to be issued on
completion (the "Consideration").
Acquisition highlights:
* The Acquisition represents a key step in executing Acal's group strategy,
creating the leading specialist distributor in Europe, with a clearly
differentiated market position
* The Directors of Acal expect the Acquisition to be earnings enhancing (before
exceptional items) in the financial year to 31st March 2011, and to create long
term value for shareholders
* Substantial operational synergies in excess of EUR5m
* For the twelve months to June 2009, BFi OPTiLAS had revenue of EUR105.0m (2008:
EUR128.8m), EBITDA before non-current operating income and expenses of EUR0.7m
(2008: EUR4.4m) and operating profit from current operations of EUR48,000 (2008:
EUR3.6m)
* The Acquisition is recommended by the Acal Board
Commenting on today's announcement, Nick Jefferies, Chief Executive of Acal
said: "I am delighted to announce the acquisition of BFi OPTiLAS, which is a key
step in our stated strategy of specialisation. By bringing the two businesses
together, we are creating a clearly differentiated specialist, providing
electronic and photonic products and services to over 14,000 customers across
Europe. This transaction creates the scale required to succeed in the key
European markets, and enables substantial operational synergies."
For further information, please contact:
Enquiries
Acal plc:
Nick Jefferies Chief Executive 01483 544500
Malcolm Cooper Finance Director 01483 544500
J.P. Morgan Cazenove:
Patrick Magee Managing Director 020 7588 2828
Salma Butt Associate 020 7588 2828
Cubitt Consulting:
Brian Coleman-Smith 020 7367 5100
James Verstringhe 020 7367 5100
Nicola Krafft 07802 724 400
A meeting for analysts and investors will be held on Thursday 29 October at
9.00am at the offices of J.P. Morgan Cazenove Limited (20 Moorgate, London EC2R
6DA).
Notes to editors:
The Acal Group is a European technology-based distributor providing sales,
marketing and other services through three divisions: Electronics, Supply Chain
and Medical. The Electronics division distributes electronic products to
industrial manufacturing and design companies. The Supply Chain division
supplies new and refurbished IT, EPOS and ATM spare parts to service providers
while the Medical division supplies hi-tech medical equipment to public and
private healthcare providers. Acal has operating companies in the UK,
Netherlands, Belgium, Germany, France, Italy, South Africa, Spain and
Scandinavia.
This announcement contains a number of forward-looking statements relating to
Acal and BFi OPTiLAS with respect to, amongst others, the following: financial
condition; results of operations; economic conditions in which Acal and BFi
OPTiLAS operate; the business of Acal and BFi OPTiLAS; future benefits of the
transaction and management plans and objectives. Acal considers any statements
that are not historical facts as "forward-looking statements". They relate to
events and trends that are subject to risks and uncertainties that could cause
the actual results and financial position of either Acal or BFi OPTiLAS to
differ materially from the information presented in the relevant forward-looking
statement. When used in this document the words "estimate", "project", "intend",
"aim", "anticipate", "believe", "expect", "should" and similar expressions, as
they relate to Acal and/or BFi OPTiLAS or their management, are intended to
identify such forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements which speak only as at the
date of this document. Neither Acal nor any member of Acal's group or BFi
OPTiLAS undertake any obligation publicly to update or revise any of the
forward-looking statements, whether as a result of new information, future
events or otherwise, save in respect of any requirement under applicable laws,
the Listing Rules, the Disclosure and Transparency Rules and other regulations.
1. Introduction
Today, Acal is pleased to announce that it has entered into a conditional
agreement to acquire the entire issued share capital of BFi OPTiLAS, for a
consideration of EUR10 million payable in cash and 2 million ordinary shares in
Acal to be issued on Completion.
The Acquisition, because of its size in relation to the Company, is a Class 1
transaction for Acal under the Listing Rules and is therefore conditional, inter
alia, upon the approval of the Shareholders. A circular will be sent to
shareholders shortly containing information relating to the Acquisition together
with a notice convening the General Meeting, to consider and, if thought fit,
approve the Acquisition.
2. Background to and reasons for the Acquisition
Acal comprises three divisions: Electronics, Supply Chain and Medical. The
Electronics division distributes specialised electronic products to industrial
manufacturing and design companies where higher margins can be generated over
time.
The Acal Board has stated that it would consider selective acquisitions to
accelerate delivery of its strategic goals by adding similar specialised
distribution businesses that add scale, strengthen Acal's business across
mainland Europe and expand the product portfolio. The acquisition of BFi OPTiLAS
is consistent with Acal's stated strategy and, in particular, the strategy of
its Electronics division.
BFi OPTiLAS is a similar specialised distributor of electronic and photonic
products and in all the geographic areas in which it operates, Acal also has
operations. Whereas approximately 50% of Acal's business is in the United
Kingdom, the majority of BFi OPTiLAS's business is derived from mainland Europe,
a region where Acal has continued to suffer losses. The Board believes that the
Acquisition provides Acal with the opportunity to cross-sell certain products of
each company, win new supplier distributorships and achieve significant
operational cost synergies. The Acquisition will create the leading specialist
electronics distributor in Europe. Management expect to achieve in excess of EUR5
million of synergies with minimal impact on sales and marketing resource,
largely through the rationalisation of back office infrastructure, an improved
distribution network, a single combined IT platform and operational and
logistical efficiencies.
3. Information on BFi OPTiLAS
BFi OPTiLAS is the parent company of the BFi OPTiLAS Group, a privately owned
group which can trace its origins back to 1955. It is, like Acal, a specialised
distributor of electronic components, modules and systems. BFi OPTiLAS's
activities focus on a number of niche technologies and its principal products
comprise sensors, connectors, radiofrequency, microwave and fibre optic
components, magnetic materials, wireless modules, laser, optical, photonic and
imaging products as well as associated test and measurement instrumentation. In
addition, BFi OPTiLAS provides value-added services such as calibration and
maintenance.
BFi OPTiLAS's head office is located at Evry near Paris, France and its main
geographic areas of operation are Germany, France, the United Kingdom, Spain,
Italy, the Benelux countries and the Nordic regions. There is a centralised
warehouse in Dietzenbach near Frankfurt in Germany which supplies the majority
of the group's products.
BFi OPTiLAS was incorporated on 20 April 2006 at the direction of Activa Capital
for the purpose of acquiring the entire share capital of BFi OPTiLAS
International SAS from Avnet. As part of the consideration due, Avnet elected to
receive shares in BFi OPTiLAS. As a consequence, the current shareholders of BFi
OPTiLAS are Activa Capital, Avnet and certain BFi OPTiLAS employees (the
"Sellers").
The senior management team of BFi OPTiLAS is led by Philippe Gruson who became
President of the BFi OPTiLAS Group on June 2008.
Philippe Gruson, 52, joined BFI-IBEXSA in 1989 having spent seven years with
Deloitte Haskins & Sells, including two years in Pittsburgh (USA). He has held
various positions in finance and operations and was involved in the company's
merger and acquisition activities in Europe, Middle East and Asia. Philippe was
appointed as co-President of the Company in 2002 and has since focused on the
sales and marketing functions. He became President in June 2008.
As at 30 June 2009, BFi OPTiLAS had total assets of EUR41.2 million and net
assets, excluding debt and cash, of EUR20.0 million. For the twelve months ended
30 June 2009, BFi OPTiLAS's revenue was EUR105.0 million and it made a loss before
tax and interest on convertible bonds of EUR0.4 million.
4. Information on the Acal Group
The Acal Group is a European technology-based distributor providing sales,
marketing and other services through three divisions: Electronics, Supply Chain
and Medical. The Electronics division distributes electronic products to
industrial manufacturing and design companies. The Supply Chain division
supplies new and refurbished IT, EPOS and ATM spare parts to service providers
while the Medical division supplies hi-tech medical equipment to public and
private healthcare providers.
Acal has operating companies in the UK, Netherlands, Belgium, Germany, France,
Italy, South Africa, Spain and Scandinavia.
In its annual report and accounts released on 1 June 2009, Acal reported profit
before exceptional items and taxation of GBP0.5 million for the year ended 31
March 2009 on revenues of GBP165.4 million. As at 31 March 2009, Acal had net
assets of GBP58.6 million. Acal has a current market capitalisation of GBP30.6
million and a share price of 116 pence.
5. Principal terms of the Acquisition
Under the terms of the Sale and Purchase Agreement, which was signed on 27
October 2009, Acal has agreed to acquire the entire issued share capital of,
warrants issued by and convertible bonds of, BFi OPTiLAS for the consideration
of EUR10 million in cash and 2 million Acal shares to be issued on Completion.
The Sale and Purchase Agreement contains warranties given by the Sellers to Acal
which are customary for a transaction of this nature. The Sale and Purchase
Agreement also includes certain "locked box" warranties, pursuant to which the
Sellers warrant that certain actions have not been taken by BFi OPTiLAS since 30
June 2009, the date of its most recent audited accounts, which might result in a
reduction in the value of its business.
The Acquisition is conditional inter alia, upon obtaining the approval of the
Shareholders at the General Meeting and the approval of the French Ministère de
l"Economie, des Finances et de l'Emploi. The Sale and Purchase Agreement will
terminate if the conditions are not satisfied by 31 December 2009. In addition,
in order for Completion to occur, the Consideration Shares must have been
admitted to trading on London Stock Exchange plc's main market for listed
securities.
6. Listing, dealing and settlement of the Consideration Shares
Application will be made to the UKLA for the Consideration Shares to be admitted
to the Official List and application will be made to the London Stock Exchange
for the Consideration Shares to be admitted to the London Stock Exchange's Main
Market for listed securities. It is expected that Admission will become
effective and that dealings for normal settlement in the Consideration Shares
will commence on the London Stock Exchange at 8.00 a.m. on Completion.
7. Financial effects of the Acquisition
Pursuant to the Sale and Purchase Agreement, Acal will pay the Consideration
upon Completion. In addition, the Company will incur transaction related fees of
approximately GBP1.5 million. It is intended that the cash consideration and
transaction related fees will be met from the Company's existing cash reserves.
The Acquisition is expected to be earnings enhancing before exceptional items
for the financial year to 31 March 2011.
8. Acal current trading and prospects
Since the Interim Management Statement issued on 24th July 2009, market
conditions have remained difficult, with limited visibility. This will impact
upon the performance of the business for the first half year. However, we have
seen a stabilisation of orders received and an improvement in gross margins in
the Electronics division. This has resulted in a stabilisation in revenues.
Purchasing Manager Indices continue to show some improvement, which supports
this trend.
Since the acquisition of Service Source Europe Limited in January, and despite
similar revenue pressures, the Supply Chain division has made significant
progress; losses on a major contract have been eliminated and back office
systems have been integrated with significant cost reductions being realised.
Cash performance has been strong with a net cash balance of GBP23 million at 30
September 2009. We continue to focus on implementing the specialisation strategy
set out in our preliminary results, and managing our cost base and working
capital. As a result, we expect to see improvements in performance in the second
half of the year as cost reductions and business improvements take effect.
We are also in the process of the triennial pension scheme valuation review
which indicates that the scheme funding deficit at the end of August 2009 is
around GBP15 million. Discussions with the pension fund trustees regarding
deficit funding arrangements are ongoing.
As stated in the 2009 annual report and accounts, the Board continues to keep
dividend policy under review but is cognisant of the importance of dividends to
shareholders. The Board would intend to continue to make dividend payments as
appropriate. In setting future dividends the Board will take account of
available resources, current trading conditions and the prospects of attaining
an appropriate level of cover in the foreseeable future.
9. BFi OPTiLAS current trading and prospects
BFi OPTiLAS has been impacted by the deterioration in the electronics market
over the past year, and particularly in the last six months of its financial
year. Its accounts for the year ended 30 June 2009 showed an operating profit
from current operations of EUR48,000 and EBITDA before non-current operating
income and expenses of EUR0.7m though BFi OPTiLAS was loss-making in the final six
months of the financial year. Whilst maintaining in place its strong technical
sales resources, cash performance has been strong and BFi OPTiLAS had a positive
cash balance at the end of September 2009.
Trading has continued to be difficult during the first quarter of the new
financial year during which the group incurred a loss. Nevertheless there are
signs of a stabilisation in orders which is expected to lead to a stabilisation
in sales and further cost reductions are being implemented. These standalone
cost reductions will be augmented by the synergy savings that are expected after
completion of the Acquisition.
10. Letters of Intent from Aberforth Partners LLP and Mr J.A.H. Curry
Aberforth Partners LLP and Mr J.A.H. Curry have each signed a letter of intent
confirming their respective intentions to vote in favour of the Resolution to be
proposed at the General Meeting to approve the Acquisition (representing, in
aggregate, 27.8% of Acal's share capital).
11. Shareholder circular and outline timetable
Acal intends to send a circular to shareholders shortly, giving further details
of the Acquisition and including notice of the General Meeting to consider, and,
if thought fit, approve the Acquisition. A separate announcement will be made in
due course to confirm the despatch of the circular and date of the General
Meeting. Completion of the Acquisition is expected to occur, subject to
shareholder and French ministry approval, shortly after the General Meeting.
J.P. Morgan Cazenove Limited, which is authorised and regulated by the Financial
Services Authority, is acting as corporate broker and Financial Advisor for Acal
and for no-one else in connection with the matters referred to in this
announcement and will not be responsible to anyone other than Acal for providing
the protections afforded to customers of J.P. Morgan Cazenove Limited nor for
giving advice in relation to the matters referred to in this announcement.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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