DiscoverIE Group PLC has acquired Wales-based telecom components group Silver Telecom (Silvertel) for an initial consideration of £21mln and up to a further £23mln in earn-outs.
Newport-based Silvertel makes high-speed internet connectivity modules and generated sales of £13.5mln and profits of £4.4mln in the year to end February 2023, though this was an exceptional year, said discoverIE.
This year, the performance is expected to be closer to the 2022 financial year when it reported revenues of £8.4mln and pre-tax profit of £2.2mln.
DiscoverIE added the acquisition is expected immediately to boost underlying earnings and underlying operating margins.
Payment will come from cash reserves and debt, though discoverIE added that its gearing will remain well below its long-term target range of between 1.5 and 2.0x, leaving capacity for further acquisitions.
Nick Jefferies, discoverIE’s chief executive, commented: "The acquisition of Silvertel continues our strategy of building a differentiated, international, growth-focused electronics group with strong operating margins.
“Silvertel has an excellent product range that is highly complementary to our existing group and will gain access to our wider range of industrial connectivity target customers.”