TIDMDSCV
RNS Number : 5409K
discoverIE Group plc
22 December 2022
7.00am, 22 December 2022
discoverIE Group plc
Acquisition of Magnasphere Corporation
discoverIE Group plc (LSE: DSCV, "discoverIE" or the "Group"), a
leading international designer and manufacturer of customised
electronics to industry, today announces the acquisition of
Magnasphere Corporation ("Magnasphere").
Magnasphere, a US-based designer and manufacturer of magnetic
sensors and switches for industrial electronic applications, is
being acquired, subject to certain vendor shareholder approvals,
for a cash consideration of $22m (GBP19.1m) on a debt free, cash
free basis, before expenses, which will be funded from the Group's
existing debt facilities.
Vendor shareholder approvals for the transaction are expected to
be received during the final quarter of this financial year. Once
completed, the acquisition is expected to be immediately accretive
to Group underlying earnings and underlying operating margin.
Magnasphere, founded in 2002, designs and manufactures high
performance magnetic sensors and switches for industrial electronic
markets including access control, data centres and specialist
vehicles. The business, which is currently majority owned by
management(1) , is based in Waukesha, Wisconsin, with manufacturing
facilities in Goshen, Indiana. The business will operate within the
Group's Variohm cluster of specialist sensor businesses as part of
the Sensing & Connectivity division whilst retaining its
distinct brand identity. Under succession plans, management
shareholders will transition leadership to existing ongoing
management over a period of up to twelve months.
Revenues for the year ended 31 December 2021 were $6.8m
(GBP5.7m) with a reported pre-tax profit of $1.9m (GBP1.6m), and an
operating margin of 28%. Gross assets at 31 December 2021 were
$5.9m (GBP5.1m). The business has continued to grow well in
2022.
Following completion of the acquisition, the Group's proforma
gearing(2) as at 30 September 2022, the Group's most recent six
month period end, increases from 0.8x to 1.1x, remaining below our
long term target range of between 1.5 and 2.0x, leaving capacity
for further acquisitions. The pipeline of acquisition opportunities
in development remains strong.
Nick Jefferies, Group Chief Executive of discoverIE plc,
said:
"This acquisition of Magnasphere continues our strategy of
building a differentiated, international, growth focused
electronics Group with strong operating margins. The transaction
brings another high quality business into discoverIE, which is
accretive to both underlying earnings and margins, and strengthens
our US footprint.
Magnasphere has a long-established track record of manufacturing
and supplying high quality custom sensors across the US. Operating
within our Variohm cluster of sensor businesses, Magnasphere 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 Magnasphere team into discoverIE Group."
For further information please contact:
discoverIE Group plc 01483 544 500
Nick Jefferies, Group Chief Executive
Simon Gibbins, Group Finance Director
Lili Huang, Head of Investor Relations
Buchanan 020 7466 5000
Chris Lane, Toto Berger, Jack Devoy
discoverIE@buchanan.uk.com
Notes
1. Magnasphere has approximately 70 individual shareholders of
whom Jim McHugh, Rick Kirschman, Francis Corby and Randall Woods
hold in aggregate a majority of the equity.
2. Gearing ratio is defined as net debt divided by underlying
EBITDA (annualised for acquisitions, excluding IFRS16)).
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 plc is an international group of businesses
that designs and manufactures innovative electronic components for
industrial applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally through its two
divisions, Magnetics & Controls, and Sensing &
Connectivity. By designing components that meet customers' unique
requirements, which are then manufactured and supplied throughout
the life of their production, a high level of repeating revenue is
generated with long term customer relationships.
With a focus on sustainable key markets driven by structural
growth and increasing electronic content, namely renewable energy,
medical, electrification of transportation and industrial
automation & connectivity, the Group aims to achieve organic
growth that is well ahead of GDP and to supplement that with
complementary acquisitions. The Group has an ongoing commitment to
reducing the impact of its operations on the environment and with
its key markets aligned with a sustainable future, MSCI has awarded
the Group an ESG "A" rating.
The Group employs c.5,000 people across 20 countries with its
principal operating units located in Continental Europe, the UK,
China, Sri Lanka, India and North America.
discoverIE is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE250, classified within the
Electrical Components and Equipment subsector.
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END
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December 22, 2022 02:00 ET (07:00 GMT)
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