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Spectris makes Millbrook acquisition

Published: 09:57 02 Sep 2016 BST

a car in a workshop
On its website, Millbrook says it is an expert in vehicle testing, validation and engineering

Spectris plc (LON:SXS) has told investors that it has acquired vehicle test, validation and engineering specialist Millbrook Group, a move which has been generally supported by analysts.

Spectris bought the private firm for £122mln, of which £3.4mln is held back for two years, from Rutland Partners and Millbrook’s management shareholders.

"Millbrook represents our largest purchase to date of a pure testing services business,” said chief executive John O’Higgins.

“It is closely related to our existing instrumentation businesses and, as such, the acquisition is an important step forward in the realisation of the Group's strategy to provide our customers with differentiated solutions that incorporate a combination of hardware, software and services.”

Millbrook posted underlying earnings (EBITDA) of £5.4mln in 2015, on revenues of £48mln.

Initial reaction from analysts suggests they are generally in favour of the acquisition, although they did point out that the price may be a bit steep.

Ben McSkelly from Shore Capital said the acquisition complements the FTSE 250 company’s instrumentation business.

Broker Liberum wasn’t absolute in its approval though, explaining in this morning’s note that, “at first glance, this acquisition looks expensive”.

Both Shore Capital and Liberum agreed that adjusted earnings per share would likely benefit from the addition of Millbrook.

McSkelly reiterated his ‘buy’ recommendation for the stock, explaining that he likes Spectris’ “strong balance sheet and ability to add earnings with M&A in areas where the group already has expertise, such as this acquisition.”

Liberum also repeated its ‘buy’ recommendation, noting that “this year Millbrook will benefit from an acquisition of a winter vehicle and tyre testing business”.

Shares in Spectris were up 4p, or 0.2%, to 1,926p.

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