Mobrey Acquired from Meggitt Plc
Roxboro Group PLC
15 December 1999
The Roxboro Group PLC - Acquisition of Mobrey
The Roxboro Group PLC ('Roxboro' or the 'Group') announces
that it has agreed to acquire the entire issued ordinary share
capital of the group of companies forming the Mobrey Group
('Mobrey') (the 'Acquisition').
- The total consideration payable for Mobrey is £22.25 million
in cash
- Mobrey is a niche-market leading manufacturer of level, flow
and pressure instrumentation products
- The Acquisition will increase the product range, enhance the
research and development capabilities and broaden the route to
market of Roxboro's instrumentation division
- Sustainable savings of not less than £3.5 million per year
are expected to be generated by the end of 2000
- Roxboro's current trading continues to be encouraging
Commenting on the acquisition, Harry Tee, Group Chief
Executive, said:
'This Acquisition is consistent with our strategy of focusing
on measurement technologies in the controls sector and
continues the rationalisation in the sector which began some
time ago. By combining Solartron and Mobrey, we can achieve
substantial synergies and create a company with strong
positions in key market niches.
Although there will be costs incurred in the rationalisation
process, the longer term profitability of the combined
business will be significantly enhanced.'
The Roxboro Group PLC - Acquisition of Mobrey
The Roxboro Group PLC announces that it has agreed to acquire
the entire issued ordinary share capital of each company in
the Mobrey Group.
The Mobrey Group is being acquired from Meggitt PLC for a
consideration of £22.25 million in cash.
Information on Mobrey
Mobrey is a UK based group employing more than 600 people,
with manufacturing facilities in the UK, Germany and France
and additional distribution facilities in Belgium, Sweden and
Poland.
Mobrey manufactures level, flow and pressure instrumentation
products for liquid and gas measurement, ranging from magnetic
level switches to ultrasonic sensing devices and has a
presence in a number of these markets including a leading
position in level measurement in the UK and a strong market
position in Europe. By product category, approximately 80 per
cent. of Mobrey's business is related to level sensing, whilst
the remainder is split between flow and pressure measurement
devices.
Mobrey has a broad customer base with no significant reliance
on any one individual customer. Its products are sold to a
diverse range of industries, which include the petrochemical,
energy, utilities and marine sectors.
During 1997, Mobrey undertook an extensive review of its
business, markets and operations. The restructuring exercise
led to the rationalisation of its manufacturing operations,
including a relocation to new production facilities in Slough,
and a substantial increase in Mobrey's focus on product
research and development (research and development costs for
the year ended 31 December 1998 were £709,000 compared to
£337,000 for the year ended 31 December 1997). The
restructuring exercise led to redundancy and reorganisation
charges of £2,147,000 and £1,536,000 in the years ended 31
December 1998 and 31 December 1997 respectively. Improved
operational efficiencies and increased focus on new product
development should result in substantial benefits in future
years.
For the year ended 31 December 1998, Mobrey reported a loss
before tax of £2,653,000 (1997: loss £940,000) after
redundancy and reorganisation charges of £2,147,000 (1997:
£1,536,000) from sales of £31,458,000 (1997: £35,756,000). As
at 31 December 1998, Mobrey had shareholders' funds of
£1,978,000 (1997: £2,961,000).
Reasons for the Acquisition
Roxboro's stated strategy is to secure market leadership in
the niche technology markets in which it operates, both
through investment in organic growth and selective
acquisitions.
The board believes that the combination of the Roxboro Group,
and in particular Solartron, with Mobrey provides an excellent
strategic, geographical and operational fit and the board
expects that the Acquisition will generate a number of
substantial benefits and opportunities to the enlarged group
by:
- increasing the instrumentation division's product range,
leading to a strengthening of the division's presence in
its markets;
- strengthening the division's product innovation through
the enhancement of research and development capabilities;
- broadening the Roxboro Group's routes to market and
enabling the Group to develop the Solartron and Mobrey
brand names in combination to increase the penetration of
Solartron's current product range into the European market
and improve sales of Mobrey's product range in the US;
- creating significant and sustainable synergy benefits
through the combination of manufacturing capability,
expertise in research and development and purchasing and
through the consolidation of administration, sales and
service networks. Estimated one off costs of £5.5 million
are expected by the end of 2000 to generate sustainable
savings of not less than £3.5 million per year.
At the time of the interim statement, the board referred to
its expectation of a sale and lease back of the Farnborough
site which had been acquired earlier in the year. As a result
of the Acquisition, the board has decided to consider further
the utilisation of this site as part of the integration plan
for Mobrey.
Outlook and prospects
The acquisition of Mobrey and the successful integration of
Norwich Aero Products and ISA controls, which were purchased
earlier in 1999, are expected to strengthen Roxboro in its key
strategic markets.
At the time of Roxboro's interim results in September, the
Group commented that given a significant improvement in its
order book since the beginning of 1999 and signs of economic
recovery in Asia, 'the immediate and longer term prospects for
Roxboro are encouraging'. On the basis of trading at the
Roxboro Group for the eleven months to the end of November
1999, the Group sees no reason to change this view.
The trading performance of Mobrey for the five months to
November 1999 has improved over the first five months of the
financial year, although the market in the general process
sector remains depressed. Whilst there are some early signs
of improvement in this market, the board does not expect to
see a significant upturn until the second half of 2000.
Additionally, Roxboro will incur reorganisation costs as a
result of the integration of Mobrey with Roxboro's
instrumentation division. Estimated one off costs of £5.5
million are expected by the end of 2000 to generate
sustainable savings of not less than £3.5 million per year.
Terms of the Acquisition
The Acquisition values the entire ordinary share capital of
each of the companies in the Mobrey Group at approximately
£22.25 million in aggregate. This payment is subject to pound
for pound adjustment in respect of any positive or negative
cash balance of the Mobrey Group on completion, subject to a
maximum additional payment by Roxboro of £700,000. Any
downward adjustment is unlimited.
Roxboro intends to finance the Acquisition through a three-
year revolving credit facility with National Westminster Bank,
Bank of Scotland and First Union National Bank.
The Acquisition is conditional upon the approval of Roxboro
shareholders at an Extraordinary General Meeting of the
Company to be held on 7 January 2000.
A circular to Roxboro shareholders giving further details of
the Acquisition and containing notice of the Extraordinary
General Meeting seeking approval for the Acquisition will be
sent to shareholders today.
Contacts
The Roxboro Group PLC
Harry Tee, Chief Executive Tel no: 01223 424626
Alf Vaisey, Finance Director Tel no: 01223 424626
Cazenove & Co.
Julian Cazalet Tel no: 0171 588 2828
Square Mile Communications Limited
Alistair Mackinnon-Musson Tel no: 0171 601 1000
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