Customised electronics supplier discoverIE Group PLC (LON:DSCV) has acquired Santon Group, a Dutch designer and manufacturer of custom switches for electronic applications.
The company has been acquired for an initial consideration of €27.0mln (£23.7mln) on a debt-free and cash-free basis.
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All but €1mln of the initial consideration will be paid in cash; the remainder will be satisfied through the issue to the seller of discoverIE shares.
In addition, contingent consideration of up to €22.5mln (£19.9mln) will be payable over the next three years subject to Santon achieving certain growth targets.
DiscoverIE will reimburse the seller €2.5mln (£2.2mln) for recent capital expenditure on the automation of Santon’s production facilities, and will also invest a further €2.5mln (£2.2mln) over the coming year to provide capacity for further growth.
The acquisition is expected to enhance discoverIE’s underlying earnings in the financial year starting April 1.
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In 2016, Santon reported underlying earnings (EBITDA) of €2.8mln (£2.3mln) on revenue of €24.4mln (£20mln).
Santon’s gross assets at the end of 2016 stood at €15.0mln (£12.8mln) on a reported basis. The business continued to grow through 2017 and is expected to benefit from access to discoverIE’s wider international customer base.
“With a long-established track record of producing high-quality DC switches, Santon builds our position in niche components for solar power, a market that is set to grow significantly, and will create new opportunities in our other target markets such as transportation and medical,” said Nick Jefferies, the group chief executive of discoverIE.