Customised electronic components maker discoverIE Group PLC (LON:DSCV) has raised gross proceeds of around £29mln via a share placing to help finance two bolt-on acquisitions and also said that it had traded strongly in the final quarter of its financial year.
The company said brokers Peel Hunt and finnCap placed a total of 7,309,867 new ordinary shares at a price of 400p each, a 3.85% discount to Monday’s closing price, with the shares trading at 415p late morning, down 0.2%. The shares being issued represent approximately 9.96% of the company’s issued share capital prior to the placing.
The placing came as the company announced the acquisition of Hobart, a US-based designer and manufacturer of custom transformers, inductors and magnetic components, and Positek, a UK-based designer and manufacturer of rugged, high accuracy linear, rotary, tilt and submersible sensors.
Hobart is being acquired for an initial consideration of US$15.2mln (roughly £11.2mln), with up to another US$4.0mln (£3.1mln) due, depending on how the business performs over the next three years. In 2018, Hobart had revenues of US$13mln (£10mln) and underlying earnings (EBTIDA) of US$2.1mln (£1.6mln).
The price for Positek is £4.2mln upfront, with up to another £400,000 due dependent on how the business performs over the next 18 months. Positek reported revenues of £1.56mln in the year to the end of August 2018 and generated EBITDA of £600,000.
DiscoverIE said the acquisitions would expand the group's international footprint, with the acquired companies generating more than four-fifths of their revenue from North America. The acquisitions would also create cross-selling and synergy opportunities within the wider group, it added.
Net debt at year-end better than expected
The group said, following the acquisitions and the placing, pro forma gearing - calculated as net debt to adjusted EBITDA (annualised for acquisitions) - as at 31 March 2019 would reduce to around 1.5x from 1.8x.
"The acquisitions of Hobart and Positek continue our strategy of building a higher margin, international group that designs and manufactures customised electronics. Both companies have long-established track records of supplying high-quality products into their respective markets,” said Nick Jefferies, discoverIE's chief executive officer.
“As part of the group, both companies will gain access to our wider base of customers and with it, new sales opportunities, whilst discoverIE will gain access to efficiencies from manufacturing in Mexico and new cross-selling opportunities,” he added.
Financial year finishes with a flourish
In a separate statement, the company confirmed that trading for the financial year just ended was in line with expectations.
Group sales for the fiscal fourth quarter increased by 12% on a reported basis, by 14% on a constant exchange rates (CER) basis and by 8% organically (excluding acquisitions). Group orders also grew by 8% organically in the period.
For the year to 31 March 2019, group sales increased by 13% on a reported basis, 14% on a CER basis and by 8% organically, with orders growing 7% organically.
Within this, the group's Design & Manufacturing division delivered organic sales growth of 10% and order growth of 11%, while in the Custom Supply division, organic sales growth was 5% with order growth of 3%.
-- Adds placing results, share price --