07 Oct 2008
Chemring Group PLC ("Chemring" or the
"Group") announces that it has conditionally agreed to
acquire the entire issued stock capital of Non-Intrusive Inspection
Technology, Inc. ("NIITEK") for an initial cash
consideration of $30 million (£16.9 million) plus a working
capital adjustment, and deferred contingent consideration of up to
$10 million (£5.6 million).
Description of the business and reasons for the
acquisition
NIITEK, based in Virginia, USA, is a leading developer of robot and
vehicle-mounted mine detection systems incorporating its advanced
Ground Penetrating Radar (GPR) and metal detection
technologies.
The acquisition of NIITEK extends Chemring's detection
capability in the £2.9 billion Explosive Ordnance Disposal
(EOD) market. With countermine and route clearance operations
becoming increasingly important to enable modern peace-keeping,
NIITEK's core R&D business has been funded by the US Army
to develop its mine detection technology. Following its successful
operational deployment, and around $10 million of pre-production
investment from the US Army, NIITEK's first product is now
ready for production. NIITEK expects to receive significant
production orders for this system, and will continue to work with
customers to develop further its robot-mounted and humanitarian
demining systems.
In addition, NIITEK provides a strong US platform for
Chemring's other EOD equipment, including disrupters,
robot-mounted EOD weapon carriers, detectors, initiators and
demolition stores.
Principal terms of the acquisition
The initial consideration of $30 million (£16.9 million) and
deferred consideration of up to $10 million (£5.6 million)
will be funded utilising existing, committed bank facilities.
Payment of the deferred consideration is contingent upon NIITEK
securing a significant production order and the three key members
of the current management team remaining with the business for at
least two years post-acquisition.
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:
"We are delighted to announce the acquisition of NIITEK at
a time when it is making the transition to volume production. The
detection technology developed by NIITEK in the last eight years is
making a revolutionary impact on the US military's capability
to achieve effective route clearance during current peace-keeping
operations. This incremental acquisition is another important
element in the development of our Explosive Ordnance Disposal
business."
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 |