TIDMDSCV
RNS Number : 5675D
discoverIE Group plc
01 February 2018
7.00am, 1 Feb 2018
discoverIE Group plc
Acquisition of the Santon Group
discoverIE Group plc (LSE: DSCV, "discoverIE" or the "Group"), a
leading international designer, manufacturer and supplier of
customised electronics to industry, today announces the acquisition
of the Santon Group via the purchase of its holding company EWAC
Holdings BV ("Santon"). Santon is a Dutch based designer and
manufacturer of custom switches for electronic applications and has
been acquired for an initial consideration of EUR27.0m (GBP23.7m)
on a debt free, cash free basis, before expenses.
The initial consideration comprises a payment of EUR26.0m
(GBP22.8m) in cash, funded from the Group's existing debt
facilities, and the issue to the vendor of new ordinary shares of
5p each in discoverIE (the "New Ordinary Shares") to the value of
EUR1.0m (GBP0.9m). In addition, contingent consideration of up to
EUR22.5m (GBP19.9m) will be payable over the next 3 years subject
to Santon achieving certain growth targets.
As well as the initial consideration, the Group will reimburse
to the vendor EUR2.5m (GBP2.2m) for recent capital expenditure on
the automation of Santon's production facilities and will also
invest a further EUR2.5m (GBP2.2m) over the coming year to provide
additional capacity for growth. The acquisition is expected to be
enhancing to Group underlying earnings from the next financial
year, beginning on 1 April 2018.
Santon is a designer and manufacturer of highly differentiated,
patented direct current ("DC") switches for use in solar,
industrial and transportation markets. The acquisition is
consistent with discoverIE's strategy of targeting structural
growth markets, in this case renewable energy and transportation,
internationalising sales and building on its position in niche
components for solar power and its established position in wind
power.
Santon operates from Rotterdam in the Netherlands, with sales
offices in the UK and Germany. The acquisition is expected to
nearly double the Group's sales into the renewable energy sector
and increase the level of Group sales into Asia from 8% to 13%.
Santon will operate within the Group's Design & Manufacturing
division whilst retaining its distinct brand identity.
The business has grown consistently over recent years and
revenues for the year ended 31 December 2016 were EUR24.4m
(GBP20.0m) generating EBITDA of EUR2.8m (GBP2.3m), a reported
pre-tax profit of EUR1.8m (GBP1.5m), and a normalised operating
profit(1) of EUR3.2m (GBP2.6m). Gross assets(2) at 31 December 2016
were EUR15.0m (GBP12.8m) on a reported basis. The business
continued to grow through 2017 and is expected to benefit from
access to the Group's wider international customer base.
Santon has been acquired from its sole shareholder and General
Manager, Maartin Reddering, who will continue in his role.
Application has been made for admission of 0.22 million New
Ordinary Shares to the Official List of the Financial Conduct
Authority and to trading on the London Stock Exchange's main market
for listed securities ("Admission"). It is expected that Admission
will become effective at 08:00 am on 6 February 2018.
Nick Jefferies, Group Chief Executive of discoverIE plc,
said:
"The acquisition of Santon continues our strategy of growing
discoverIE into a highly differentiated, international electronics
design and manufacturing group.
With a long-established track record of producing high quality
DC switches, Santon builds our position in niche components for
solar power, a market that is set to grow significantly, and will
create new opportunities in our other target markets such as
transportation and medical.
We are delighted to welcome Maarten Reddering and the Santon
team into the Group."
For further information please contact:
discoverIE Group plc 01483 544 500
Nick Jefferies - Group Chief Executive
Simon Gibbins - Group Finance Director
Instinctif 020 7457 2020
Mark Garraway
Helen Tarbet
James Gray
Notes
1. Normalised operating profit excludes finance charges,
exceptional items, restructuring and shareholder costs.
2. Gross assets are the total of non-current assets plus current assets.
3. The information contained within this announcement is deemed
by the Group to constitute inside information as stipulated under
the Market Abuse Regulation, Article 7 of EU Regulation 596/2014.
Upon the publication of this announcement via Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Notes to Editors:
About discoverIE Group plc
discoverIE Group (LSE: DSCV; previously Acal plc) is an
international group of businesses that designs, manufactures and
supplies innovative components for electronic applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally. With in-house
engineering capability, we are able to design components to meet
customer requirements, which are then manufactured and supplied,
usually on a repeating basis, for their ongoing production needs.
This generates a high level of recurring revenue and long term
customer relationships.
By focussing on key markets which are driven by structural
growth and increasing electronic content, namely renewable energy,
transportation, medical and industrial connectivity, the Group aims
to achieve organic growth that is well ahead of GDP and to
supplement that with targeted complementary acquisitions.
The Group employs c.3,800 people and its principal operating
units are located in Continental Europe, the UK, China, Sri Lanka,
India and North America.
The Group is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE Small Cap Index, classified
within the Electrical Components and Equipment subsector, and has
revenue of GBP0.4bn. Over the last five years, revenue and
underlying earnings per share have doubled.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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