27 May 2008
Chemring Group PLC ("Chemring" or the
"Group") announces that it has conditionally agreed to
acquire the entire issued stock capital of Scot, Inc.
("Scot") from SMS Industries, Inc. (a private equity
owner) for a cash consideration of US$40 million (£20.2
million), with a working capital adjustment at completion.
Description of the business and reasons for the
acquisition
Scot, based in Downers Grove, Illinois, USA, is a leading
manufacturer of cartridge-actuated and propellant-actuated devices
(CAD/PADs) used in aircraft emergency systems and for aircrew
egress. Scot also designs and manufactures actuators, valves and
sequencers, separation nuts and bolts, and aircraft weapon ejector
systems.
In the year ended 31 December 2007, Scot reported an audited
profit before tax (before non-recurring private equity interest
costs of $2.7 million (£1.36 million)) of $4.7 million
(£2.37 million) on revenue of $23.8 million (£12.0
million). Gross assets as at that date were $9.7 million
(£4.9 million). The acquisition is expected to enhance
Chemring's earnings in the first full financial year
post-completion.*
The acquisition of Scot provides Chemring with an important US
centre-of-excellence for the design, development, qualification and
manufacture of pyrotechnic devices and sub-systems used in
aircraft, missile and space platforms. Furthermore, Scot's
engineering capability complements the existing high volume
manufacturing and automation skills within Chemring North America,
and should significantly enhance the Group's position in the
US pyrotechnic market. Scot also adds key customer relationships
that will enhance the routes-to-market for Chemring's full
range of CAD/PAD products, including rocket motors, pyrotechnic
transmission cords, canopy cutting charges and actuators.
Principal terms of the acquisition
The consideration of $40 million (£20.2 million) will be
funded utilising existing bank facilities.
Completion is conditional upon, inter alia, the expiry
of the thirty day waiting period imposed by an Exon-Florio filing
in the US.
Commenting on the acquisition, David Price, Chief Executive of
Chemring, said:
"The acquisition of Scot significantly enhances our
engineering and design skills within the CAD/PAD and pyrotechnic
market. The complementary products and the combined capabilities of
Scot and our existing subsidiary, Technical Ordnance, Inc., will
create a world class company that will quickly become the leading
supplier of pyrotechnics to the US aerospace market."
* This statement should not be taken to mean that the
earnings per share of Chemring will necessarily match or exceed the
historical reported earnings per share of Chemring and no forecast
is intended or implied.
For further information:
| Dr David Price |
Chief Executive, Chemring Group PLC |
01489 881880 |
| Paul Rayner |
Finance Director, Chemring Group PLC |
01489 881880 |
| Rupert Pittman |
Cardew Group |
0207 930 0777 |