Diploma PLC (LON:DPLM) has acquired St Albans-based specialist cable maker FS Cables for a total cash consideration of £18mln.
The FTSE 250 technical products supplier said the acquisition would be “immediately earnings enhancing” and would be reported as part of its Controls Sector activities.
READ: Diploma reports rise in first-half profits despite currency headwinds
The sellers of FS Cables would also remain at the company until 28 February 2019 to ensure a smooth management transition.
Diploma added that an initial cash consideration of £17mln, funded by existing cash resources, would be paid on completion with a deferred consideration of £1mln to be payable based on aggregate earnings before interest and tax (EBIT) achieved in the year ending 31 October 2018.
FS Cables is a long established and leading supplier of specialist cable products to installers, end-users and wholesalers for a range of industries including electrical contracting, home automation & building management, rail, marine and telecommunications.
The business primarily supplies own branded products sourced from a portfolio of long-standing suppliers, but also sources some products from leading branded manufacturers.
In a note to clients, analysts at City broker Numis downgraded the firm’s stock to ‘Hold’ from ‘Add’, saying they believed the acquisition would be “complementary” to Diploma’s acquisition of cable accessories provider Cablecraft on 2016 but would update their forecasts following a pre-close trading update to be released on 29 August.
In mid-morning trading Wednesday, Diploma shares were down 1% at 1,287p.
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