Stadium Group PLC (LON:SDM) saw its shares gain this morning as it announced the acquisition of PowerPax UK Ltd, a well-recognised brand serving the industrial power supply market, for a total consideration of £2.8mln in cash.
The AIM-listed electronics firm said the deal is its fifth value-adding technology business acquisition in the last five years, and strengthens the group’s Power Division.
Stadium Group shares were up 5.5%, or 7.0p to 133.0p.
READ: Strong first half for Stadium Group as revenues, order book grow
The group said the acquisition “is expected to be earnings accretive in its first full year of ownership.”
Berkshire-based PowerPax is a specialist value-added manufacturer and distributor of a wide range of power supplies, battery chargers and LED products, including AC-DC switch mode power supply units and DC-DC converters.
For the year ended 31 August 2016, PowerPax had sales of £3.3mln and profit before interest and tax of £0.4mln.
Increased debt facility with HSBC
Stadium said the acquisition consideration will be funded from existing cash resources and through an increased debt facility with our existing lender, HSBC.
In order to support plans for further accelerated growth both organically and through acquisition, HSBC has agreed to increase the group’s existing £5.0mln revolving credit facility to £15.0mln on a three-year term, with the option for a further two-year extension.
Charlie Peppiatt, Stadium’s chief executive officer said: "PowerPax is an excellent synergistic fit for Stadium's Power Division; fully aligned with our growth plans for design-led technology products and ideally placed to seamlessly integrate its highly complementary product line into Stadium Stontronics.
“We expect to see the full financial benefits of this Acquisition from 2018 onwards."
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