Acquisition

RNS Number : 2468V

Chemring Group PLC

27 May 2008

 



FOR IMMEDIATE RELEASE                                                                                                                                                                               27 MAY 2008

CHEMRING GROUP PLC

ACQUISITION OF SCOT, INC.

Chemring Group PLC ('Chemring' or the 'Group') announces that it has conditionally agreed to acquire the entire issued stock capital of Scot, Inc. ('Scot') from SMS Industries, Inc. (a private equity owner) for a cash consideration of US$40 million (£20.2 million), with a working capital adjustment at completion.

Description of the business and reasons for the acquisition 

Scot, based in Downers Grove, Illinois, USA, is a leading manufacturer of cartridge-actuated and propellant-actuated devices (CAD/PADs) used in aircraft emergency systems and for aircrew egress. Scot also designs and manufactures actuators, valves and sequencers, separation nuts and bolts, and aircraft weapon ejector systems. 

In the year ended 31 December 2007, Scot reported an audited profit before tax (before non-recurring private equity interest costs of $2.7 million (£1.36 million)) of $4.7 million (£2.37 million) on revenue of $23.8 million (£12.0 million). Gross assets as at that date were $9.7 million (£4.9 million). The acquisition is expected to enhance Chemring's earnings in the first full financial year post-completion.*

The acquisition of Scot provides Chemring with an important US centre-of-excellence for the design, development, qualification and manufacture of pyrotechnic devices and sub-systems used in aircraft, missile and space platforms. Furthermore, Scot's engineering capability complements the existing high volume manufacturing and automation skills within Chemring North America, and should significantly enhance the Group's position in the US pyrotechnic market. Scot also adds key customer relationships that will enhance the routes-to-market for Chemring's full range of CAD/PAD products, including rocket motors, pyrotechnic transmission cords, canopy cutting charges and actuators.   

Principal terms of the acquisition  

The consideration of $40 million (£20.2 million) will be funded utilising existing bank facilities. 

Completion is conditional upon, inter alia, the expiry of the thirty day waiting period imposed by an Exon-Florio filing in the US.

Commenting on the acquisition, David Price, Chief Executive of Chemring, said:

'The acquisition of Scot significantly enhances our engineering and design skills within the CAD/PAD and pyrotechnic market. The complementary products and the combined capabilities of Scot and our existing subsidiary, Technical Ordnance, Inc., will create a world class company that will quickly become the leading supplier of pyrotechnics to the US aerospace market.'  

* This statement should not be taken to mean that the earnings per share of Chemring will necessarily match or exceed the historical reported earnings per share of Chemring and no forecast is intended or implied.

For further information:

Dr David Price        Chief Executive, Chemring Group PLC              01489 881880

Paul Rayner             Finance Director, Chemring Group PLC            01489 881880

Rupert Pittman        Cardew Group                                                  0207 930 0777

 

END

 

 

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