Trifast expands with £15m acquisition as H1 revenues grow
ENGINEERING group Trifast has expanded with the acquisition of a Malaysian industrial fastening group in a deal worth £15m.
Birmingham-based Trifast, which manufactures and distributes industrial fastenings, is purchasing the entire issued share capital of Power Steel and Electro-plating Works.
The announcement was timed to coincide with the release of Trifast’s half-year results, which showed group revenue up 7% to £55.44m (HY 2010: £52.04m).
The acquisition will be funded in part by the conditional placing of 21,621,622 new ordinary shares of 5p each at a placing price of 37p each. This is expected to raise approximately £8m (before expenses) with the reminder of the cash consideration to be funded from a new bank facility from DBS Bank.
The placing has been underwritten by Arden Partners, which acts as financial adviser, sponsor and sole broker to the company.
The Trifast board said it believed the deal was in the best long-term interests of the group and has recommended shareholders approve the move at a general meeting on December 13.
Commenting on the acquisition Malcolm Diamond, the group’s executive chairman said: “PSEP represents an excellent strategic fit for Trifast as PSEP operates as a manufacturer of highly engineered parts to the automotive, motorcycle and compressor industries.
“This will enable Trifast to offer a full range of threaded fasteners manufactured within the enlarged group’s facilities to these industry sectors which the directors consider to be strategic for its global aspirations.
“The PSEP’s operational management team will benefit from Trifast’s global sales and marketing resources and will present opportunities beyond its current customer base, whilst simultaneously allowing Trifast access to PSEP’s client base.”
He said the deal also presented Trifast with a good opportunity to increase its presence in an important emerging market.
“We firmly believe that PSEP offers an exciting opportunity for growth in the Asian market given the strong rationale and compelling financial case.
“We are delighted with the level of support from new and existing investors and look forward to reporting on the Enlarged Group in due course,” he added.
In its intrims report, the group said that by territory, Europe was up 19% and although on a like for like basis Asia revenue remained flat, the group said it was pleased with a 10% improvement over its sales performance in the second half of the last financial year to March 2011. Pre-tax profit for the first six months was £2.13m, up from £1.48m this time last year.
Mr Diamond, in a joint statement with chief executive Jim Barker, said: “Following on from the improvements we saw during the second half of the last financial year, our first half performance reflects not only revenue growth but more importantly, an excellent increase in profitability over the comparable 2010 period.
“The Directors are pleased with continued trading and even with the current ‘Eurozone’ difficulties, remain comfortable with current market expectations.”
