1st Apr 2015 06:36
LONDON (Alliance News) - Senior PLC Wednesday said it has bought Lymington Precision Engineering (LPE) Ltd for an initial GBP45.8 million in cash, a deal it expects to boost its earnings even though the newly acquired company is set to be hit by the steep drop in oil prices.
In a statement, Senior said it could pay up to GBP31.7 million more for Lymington depending on the acquired company's performance in the next 12 months.
Lymington makes precision-machined components, fabrications, assemblies and kit sets for the oil and gas, telecommunications, aerospace, defence, land and sea systems, nuclear and marine industries. It will be integrated into Senior's Flexonics Division and its current management team is staying with the business.
"Due to the current short-term uncertainties in the oil and gas market, which accounts for 85% of Lyminton's sales, the financial performance of the company is expected to be materially lower over the next twelve months than that experienced in the recent past. The acquisition is, however, still expected to be immediately earnings enhancing. Following the acquisition, sales to the oil and gas sector will represent approximately 5% of group revenue," Senior said in a statement.
Lymington made revenue of GBP42.7 million in the year to end-March, 2014, and trading profit before interest, tax, depreciation and amortisation of GBP7.0 million. Its revenue is expected too have increased to GBP51.2 million in the year ended Tuesday, while Ebitda is expected to have increased to GBP9.0 million.
Senior said the acquisition will be funded using its existing borrowing facilities, a new two-year GBP20 million revolving credit facility and new one-year term loans totalling GBP25 million.
"LPE represents an excellent addition to Senior's portfolio, strengthening the group's precision machining capabilities and providing access to LPE's strong customer relationships and adjacent markets. Combined with Senior's wider market access and financial strength, LPE represents an excellent platform to enhance the longer-term growth prospects for the Senior Group," Chief Executive Mark Rollins said in a statement.
By Steve McGrath; [email protected]; @stevemcgrath1
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