TIDMECM
RNS Number : 1043P
Electrocomponents PLC
24 May 2018
24 May 2018
Electrocomponents announces acquisition of IESA
-- Acquisition of leading corporate MRO(1) marketplace provider of value-added services
-- Significantly enhances the Electrocomponents service offer to corporate customers
-- Expands existing eCommerce offer and platform technology capabilities
-- Electrocomponents brings scale benefits to IESA and potential to accelerate growth
-- Accretive to adjusted(2) earnings per share and expected to
meet our cost of capital in year one
In line with our strategy to build out our value-added service
proposition, Electrocomponents plc is pleased to announce that it
has reached agreement to acquire IESA, a leading provider of
value-added services to industrial customers for a cash
consideration of GBP88 million.
IESA provides value-added services in three key areas: sourcing;
transaction processing; inventory and stores management. Its
services allow clients to improve their efficiency and consolidate
their indirect procurement vendor base via a cloud-enabled
proprietary marketplace solution, MyMRO. MyMRO was developed
specifically to meet the indirect procurement challenges of
large-scale clients, it integrates thousands of approved MRO
vendors on to its proprietary marketplace and offers its client
base complete invoice consolidation for all transactions. IESA
operates a fee-for-services model to corporate clients, primarily
in the UK.
The acquisition of IESA will enhance and accelerate the
Electrocomponents value-added services offering, giving it
additional capabilities to service corporate customers who choose
to outsource their MRO and other indirect purchases and inventory
management. IESA's fully integrated indirect supply and
comprehensive stores solutions complement Electrocomponents'
existing product and value-added service capabilities giving it a
full service end-to-end solution for customers.
As part of Electrocomponents, IESA and its clients will benefit
from the scale and international spread of the broader Group.
Electrocomponents' relations with international suppliers will
enable IESA to enhance its offering to its clients, whilst at the
same time the Group's international sales presence and digital
capabilities should enable IESA to grow revenue at a faster rate.
RS and RS Pro are already suppliers to IESA and there are
opportunities to further develop this relationship over time.
The acquisition is expected to be accretive to
Electrocomponents' adjusted (2) operating profit margin(3) and to
enhance adjusted(2) earnings per share in the first year of
ownership. We expect the acquisition to meet our cost of capital in
the first year of ownership.
LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED:
"The acquisition of IESA will improve our value-added services
proposition, significantly enhancing our offer for customers. We
believe the combined digital capability of IESA and
Electrocomponents is a market differentiator and will greatly
enhance the experience we can offer our customers and suppliers
with a much wider range of eCommerce-led solutions. We are excited
to welcome IESA to the Electrocomponents Group."
The IESA business
IESA is based in Warrington, near Manchester in the UK and
employs 500 people, 350 of whom work on site at client facilities.
IESA has over 27,000 suppliers and its client base is primarily in
the UK manufacturing, assembly and process industries. IESA's
proprietary platform, MyMRO, is integrated into clients' own
systems providing them with the opportunity for cost savings and
inventory reduction. IESA also offers training and consultancy to
drive continuous improvement leading to inventory optimisation
benefits. For more information see www.iesa.co.uk.
Total gross income for IESA for the year ended 30 March 2018 was
GBP232 million, however this includes inventory pass through
revenues of GBP207 million reflecting IESA's sourcing activities.
Revenue of GBP25 million represents IESA's value-added services fee
revenue. Adjusted(2) operating profit for the year ended 30 March
2018 was GBP7 million. Over 90% of IESA's revenues are from the UK
market, with the balance primarily in Europe. In 2018 IESA saw
strong double-digit growth in fee revenue from adding new client
contracts.
IESA will be run as a separate business unit within
Electrocomponents, with the existing CEO reporting to Lindsley
Ruth.
Acquisition details and financing
Electrocomponents has entered into an agreement to acquire IESA
(AGHOCO 1079 Limited), from Gresham Private Equity and others for
GBP88 million on a cash-free and debt-free basis, subject to
customary adjustments. The acquisition is expected to complete by
the end of May 2018 and will be financed out of a new GBP120
million term loan, which is also available for general corporate
purposes.
The acquisition constitutes as a class 2 transaction for the
purposes of the UK Financial Authority's Listing Rules. Total gross
assets for the year ended 30 March 2018 were GBP121 million.
1) Maintenance repair and operations (MRO).
2) Adjusted excludes amortisation of acquired intangible assets,
substantial reorganisation costs, asset write-downs and one-off
pension credits or costs, significant tax rate changes and
associated income tax.
3) Adjusted operating profit margin is adjusted operating profit as a percentage of revenue.
Enquiries:
Lindsley Ruth, Chief Executive
Officer Electrocomponents plc 020 7239 8400
David Egan, Group Finance Director Electrocomponents plc 020 7239 8400
Polly Elvin, VP of Investor Relations Electrocomponents plc 020 7239 8427
Martin Robinson / Lisa Jarrett-Kerr Tulchan Communications 020 7353 4200
Notes to editors:
Electrocomponents, through its brands RS Components (RS) and
Allied Electronics and Automation (Allied), is the global
distributor for engineers. We offer more than 500,000 industrial
and electronic products, sourced from 2,500 leading suppliers, and
provide a wide range of value-added services to over one million
customers. With operations in 32 countries, we trade through
multiple channels and ship around 50,000 parcels a day.
We support customers across the product life cycle, whether via
innovation and technical support at the design phase, improving
time to market and productivity at the build phase, or reducing
purchasing costs and optimising inventory in the maintenance phase.
We offer our customers tailored product and service propositions
that are essential for the successful operation of their businesses
and help them save time and money.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQPGUMWAUPRPUW
(END) Dow Jones Newswires
May 24, 2018 02:01 ET (06:01 GMT)
Rs (LSE:RS1)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rs (LSE:RS1)
Historical Stock Chart
From Apr 2023 to Apr 2024