Acquisitions

RNS Number : 4210O

Dewhurst PLC

30 June 2010

 

Dewhurst PLC (the "Company" or "Dewhurst")

Acquisition of stakes in Elevator Research & Manufacturing Corp. and Winter & Bain Manufacturing, Inc.

Dewhurst PLC, an independent supplier of quality components to the lift, keypad and rail industries, is pleased to announce the acquisition of stakes in Elevator Research & Manufacturing Corp. ("ERM") and Winter & Bain Manufacturing, Inc. ("W&B"), both Californian corporations which specialise in the elevator market.

ERM is a fixture and controller manufacturer which provides a range of products to the elevator market. W&B supplies elevator cabs, hydraulic packages and related parts to the elevator industry. Both companies are under common ownership.

The acquisition of these stakes in ERM and W&B demonstrates the Company's commitment to continue to expand its international operations.  Part of the Company's strategy over recent years has been to seek to add additional fixture businesses around the world that can act as an outlet for sales of the Company's components and add value with local supplies and support for customers.  The Company also aims to sell a wider range of products to its existing customers.  The ERM acquisition provides an additional fixture business for the Company in the established market of the US west coast.  ERM is already a customer of Dewhurst, so this acquisition will not generate additional component sales, but it will secure those sales.  The W&B acquisition provides Dewhurst with the ability to sell complementary products to customers across the North American market.

The key terms of the deal are as follows:

·      The Company has acquired the stakes of Lynn Park (held by Lynn and Susanne Park Trust) in ERM (25%) and W&B (41.67%) for a total cash consideration of US$1million with effect from 1 July 2010. Lynn Park will retire from the business and has agreed to certain restrictive covenants for a period of 3 years.

·      The Company has also agreed with the two remaining shareholders in ERM and W&B, Ed Park (shares held in the name of Frank Edward Park Revocable Separate Property Trust) and Clive Mann (shares held in the name of Mann Family Trust), that it shall purchase their entire shareholdings in ERM and W&B no later than 1 July 2014. There are also provisions in the agreement for Dewhurst to purchase this balance of the shares in ERM and W&B earlier in certain circumstances, such as the death or disability of Ed Park and Clive Mann. The consideration, to be payable in cash, will be the greater of (a) 3 times the sum of EBITDA of the best 2 consecutive financial years prior to the sale less net debt; or (b) $2,017,000 for Park's shares and $1,067,000 for Mann's shares subject to certain discounts depending on the profit before tax for the financial years prior to the sale.

·      Richard Dewhurst will be appointed as a director of both ERM and W&B. Following the sale of Ed Park's and Clive Mann's shares, they may continue to be employed in the business for 12 months, and will be on 12 months' notice, following which they will be subject to certain restrictive covenants.

In the year ended 31 December 2008 (the most recent filed financial information), ERM made a profit before tax of US$445,421 on turnover of approximately US$4,932,222 and W&B made a profit before tax of US$213,281 on turnover of approximately US$4,697,748.

The acquisition of the stakes in ERM and W&B, due to its size relative to the Company, is deemed to be a substantial transaction under the AIM Rules.

Commenting on the acquisition, Richard Dewhurst, Chairman of the Company, said: "We have known the management team at ERM and W&B for many years and believe we share many common values.  Adding these businesses to the Dewhurst group should enable us to grow our market share in the important US market.  As ERM already uses Dewhurst components the business should be relatively easy to assimilate into the group in due course.  Clive Mann used to work for the Company's Canadian subsidiary and I will look forward to working with him again.  I also look forward to working with Ed Park who is a highly respected member of the North American Elevator industry."

For further details please contact:

Dewhurst Plc	Tel: [phone]
Jared Sinclair
Seymour Pierce Ltd	Tel: [phone]
Nicola Marrin/Stewart Dickson

 

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