2nd Oct 2024 10:43
(Alliance News) - Solid State PLC on Wednesday announced an acquisition in the UK, while its recently announced share split became effective.
The Worcestershire-based electrics supplier said it will buy Gateway Electronic Components Ltd for an initial GBP1.4 million. The acquisition will be funded from Solid State's existing cash resources.
Gateway, which is a Cheshire-based specialist in ferrite and magnetic components and solutions, will join Solid State's Components division Solsta.
Solsta Managing Director John Macmichael said: "Gateway broadens our product line within sectors that are already core to our footprint, whilst equally giving Solid State an additional aligned client base for its existing product range. The drive to higher margin own-brand products is further enhanced through the addition of the machined ferrite range of products.
Solid State said: "In recent years Gateway's reported results reflect some exceptional performance which benefitted from global component shortages and included some non-recurring revenue. In line with broader industry trends, the business has seen a normalisation in demand in its industrial markets post the shortages."
It added that Gateway has an annualised run rate of revenue of around GBP3.0 million and pretax profit of GBP200,000, with a net asset value of GBP1.0 million as at August 31.
Solid State expects the acquisition be enhance its earnings and be accretive to the gross margin of the Components unit in the first full year.
Gateway Founder & Managing Director Martin Ford said: "We've built an excellent business in Gateway which fits very neatly into the culture of Solid State. Their drive to innovate gives me confidence that our technology will be more widely built into customer solutions. As founder of Gateway, I am pleased for our loyal staff that the next phase of growth for the business will be under the capable stewardship of Solid State."
Solid State shares were quoted at 270.00 pence each on Wednesday morning in London, giving the company a market capitalisation of GBP133.6 million. The stock was up 15% after accounting for its share split.
On Friday last week, Solid State confirmed plans for a share split by means of a bonus issue of shares on the basis of four new shares for each one already held. This had been approved at its annual general meeting in mid-September. The new shares started trading on Tuesday.
By Tom Budszus, Alliance News slot editor
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