Cable specialist in £14.3m acquisition
Warrington-based cable group, Volex, has announced the acquisition of GTK (Holdco) Limited, for a total consideration of £14.3m.
GTK is a UK-based manufacturer of customised electronic solutions, including cable assemblies, displays and connectors and is currently owned by funds administered by YFM Equity Partners and its management team.
The company is headquartered in Basingstoke and has operations in the UK, Romania and Taiwan.
In business for more than 25 years, it has in excess of 300 active customers and is focused on the Northern European market.
For the year ended July 31, 2018, GTK reported audited revenues of £15.8m and a pre-exceptional operating profit of £1.7m.
Revenue has increased by 49% over the past three years, representing an annual growth rate of 14.2%.
On completion, GTK had cash on balance sheet of £1.3m.
The Volex acquisition represents a 5.7 times multiple of adjusted historical operating profit.
Volex said the consideration has been satisfied by a £12.5m payment in cash, and the balance by the issue of 2,124,016 new ordinary shares of 25 pence each in the company.
The consideration shares are subject to a six-month lock-up.
Nat Rothschild, executive chairman of Volex, said: “This acquisition, which is immediately accretive to our earnings per share, represents an important next step in expanding Volex’s market-leading cable assemblies division.
“Furthermore, GTK’s business introduces important new capabilities to our group, and brings new customer relationships, a highly-skilled European-based sales and engineering team, and innovative new products.
“In addition, I am very pleased that Volex is back manufacturing in the UK after a gap of over 10 years.”
Application has been made to the London Stock Exchange for the admission of the consideration shares to trading on AIM. Admission is expected to take place at 8am on December 14, 2018.
Following the issue of the consideration shares, the issued share capital of the company will comprise 147,367,933 ordinary shares of 25 pence, each with one voting right.