Renold set to swallow German rival for £4.5m
MANCHESTER-based industrial chain supplier Renold has swooped to buy German company Aventics Tooth Chain, a division of Aventics Gmbh for £4.5m.
The deal on a cash and debt free basis will involve by an initial payment of €4.8m at completion followed by further expected payments of up to €1.5m over the two year period, contingent on achieving certain sales targets.
All payments will be satisfied from the company’s existing banking facilities. Completion of the acquisition is expected to occur after the statutory ‘TUPE’ consultation period with the employees in Germany and after certain carve out activities have been completed to separate the business from Aventics.
As a division of Aventics Gmbh, Aventics TC does not prepare separate audited accounts. Based on financial information obtained by Renold during the due diligence process, third-party sales in the year to December 31 2014 were £5.3m.
In addition, approximately £1m of sales were delivered indirectly via other Aventics group companies and plans are in place to transition this indirect business to Renold as part of the post- closing process.
On a proforma basis, Aventics TC made an operating profit before exceptional items of £0.8m in the year ended December 31. Gross assets at that date were £1.2m.
Renold chief executive Robert Purcell said: “The purchase of Aventics TC is an excellent fit with phase three of our STEP 2020 Strategic Plan (the ‘Acquisitions’ Phase).
“Aventics TC manufactures a specialist, high quality product which will expand our existing product offering whilst Renold’s international footprint will, over time, give the Tooth Chain business access to new customers and geographies.”
Meanwhile, Renold has reported a 6.8% fall in underlying sales with revenue down £84.5m in the six months to September 30 (HY 2014: £90.7m).
Underlying profit rose 2.6% to £7.9m (HY 2014: £7.7m) with earnings per share up 8.7% to 2.5p.
Corporate partner Daniel Hall from law firm Eversheds in Manchester advised Renold on the acquisition.
