discoverIE Group (LON:DSCV ) has acquired Limitor GmbH, a designer and manufacturer of thermal safety components and sensors for an initial cash consideration of €14.5 million.
The designer, manufacturer and supplier of customised electronics to industry said this will be subject to certain regulatory approvals, for an initial cash consideration of €14.5m, on a debt free, cash free basis, before expenses, and funded from its existing debt facilities.
In addition, the company said a contingent payment of up to €3.5 million will be payable subject to the business achieving certain profit growth targets over the next three years.
Regulatory approvals are expected to be received during the final quarter of this financial year and once completed, the acquisition is expected to be enhancing to the Company’s underlying earnings as well as accretive to the Group's underlying operating margin.
Limitor produces temperature and current sensors and limiters and thermal switches which are used in several industrial applications including a number of niche segments. Around 85% of its sales are within Europe, with 15% being into the US, Asia and other non-EU markets.
The business, which is based in Urbach, Germany with manufacturing facilities in Pécs in Hungary, will operate within the Group's Variohm cluster of specialist sensor businesses as part of the Design & Manufacturing division whilst retaining its distinct brand identity.
Shares in discoverIE Group have traded within a range of 560p and 650p over the past month to open 1.79% higher this morning at 568p following the announcement.
The business has performed consistently over recent years with ‘resilient trading’, with revenues for the year ended 31 December 2019 of €8.2m generating a reported pre-tax profit of €1.7m,and an operating margin of 21%. Gross assets at 31 December 2019 were €3.9.
Limitor will be acquired from its three joint shareholders and MDs, Mr A. Rudolph, Mr A. Fischer and Mr U. Angermaier. Sales director, Mr Rudolph and production director, Mr Fischer will continue in their roles while FD, Mr Angermaier will retire following a period of transition.
Following completion of the acquisition, the Group's pro forma gearing as at 30 September 2020, its most recent six month period end, increases from 1.2x to 1.45x, remaining below its long term target range of between 1.5 and 2.0x, ‘leaving capacity for further acquisitions.’
"The acquisition of Limitor continues our strategy of building a differentiated, international, growth focused electronics Group with strong operating margins and will be accretive.
Limitor has a long-established track record of manufacturing and supplying high quality custom sensors internationally, principally for safety applications,” said CEO, Nick Jefferies.
He added, “Operating within our Variohm cluster of sensor businesses, it will gain access to our wider base of customers and with it, new sales opportunities in our target markets. We are delighted to welcome the Limitor team into discoverIE Group.”
Follow News & Updates from discoverIE Group here: