4th Jul 2024 11:55
(Alliance News) - Spectris PLC's acquisition of SciAps Inc on Thursday was given the thumbs up by analysts at Stifel who felt it was a good strategic fit with a company with a strong growth record.
On Thursday, Spectris, a London-based supplier of high-tech instruments, test equipment and software for industrial applications said it will buy SciAps for up to USD260 million.
The acquisition comprises an upfront cost payment of USD200 million and a deferred payment of up to USD60 million.
Based in Boston, Massachusetts, SciAps is a provider of handheld instruments leveraging X-ray fluorescence and laser induced breakdown spectroscopy techniques for materials analysis.
Spectris Chief Executive Officer Andrew Heath described SciAps as an "excellent business and a great addition to Spectris Scientific".
"The acquisition will strengthen Spectris' position in a number of key end markets benefiting from long-term, secular and sustainability growth trends, as well as accelerating sales of SciAps and Malvern Panalytical's offerings through each other's sales and distribution channels," Heath added.
Stifel said SciAps has a strong growth record with five year sales compound annual growth of more than 30% although margins appear to be a little lower than Spectris's own.
"The strategic fit with Malvern Panalytic looks good, with SciAps devices used in the field, complementing MalPan's lab-based equipment, with both targeting circular economy materials growth markets," the broker added.
Stifel noted the deal is expected to enhance earnings in year one, with returns expected to exceed cost of capital by year three.
With synergies assumed at USD6 million by the company, the forward enterprise value to earnings before interest, tax, depreciation and amortisation multiple at 14x looks "full, and above Spiectris's own valuation [around 11x], but not excessive in our view given the growth profile of the target," Stifel observed.
Stifel reiterated a 'buy' rating on Spectris.
Spectris shares rose 2.0% to 2,906.00 pence each on late Thursday morning in London.
By Jeremy Cutler, Alliance News reporter
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