TIDMDSCV
RNS Number : 2176M
discoverIE Group plc
13 September 2023
7.00am, 13 September 2023
discoverIE Group plc
Acquisition of 2J Antennas Group
discoverIE Group plc (LSE: DSCV, "discoverIE" or the "Group"), a
leading international designer and manufacturer of customised
electronics to industry, today announces the acquisition of 2J
Antennas Group ("2J") , a Slovakian-based designer and manufacturer
of antennas, for a cash consideration of EUR52.5m (GBP45.0m) on a
debt free, cash free basis, before expenses, which will be funded
from the Group's existing debt facilities.
Founded in 2002, 2J is a leading designer and manufacturer of
high performance antennas for industrial electronic connectivity
applications that are closely aligned with the Group's
sustainability-linked target growth markets. 2J, which was owned by
management(1) who will continue with the business, is based in
Bardejov, Slovakia with subsidiaries in the US and UK, selling into
more than 50 countries and has a long track record of profitable
growth at operating margins significantly higher than the Group
average.
2J will become part of the Sensing & Connectivity division
and form a new technology cluster with the Group's existing antenna
business, Antenova, creating a leading platform in the long-term
growth, high performance, industrial wireless connectivity market.
With highly complementary products, both businesses will retain
their distinct brand identities, under common expanded leadership,
and will be integrated over time onto a common infrastructure. This
combination represents an attractive opportunity for the Group to
accelerate growth in the market for wireless connectivity in
industrial applications, an area set to grow strongly driven by
application areas such as the Industrial Internet of Things (IIoT),
robotics and artificial intelligence (AI) controlled industrial
systems that require dependable wireless communication to
function.
For the year ended 31 December 2022, 2J reported revenues of
EUR18.1m (GBP15.5m), pre-tax profit of EUR4.4m (GBP3.8m),
underlying operating profit of EUR3.7m (GBP3.2m) and a 21%
underlying operating margin. Gross assets at 31 December 2022 were
EUR8.1m (GBP6.9m). Following a current year of normalising customer
inventories, 2J is expected to continue its strong organic growth
enhanced by access to discoverIE's wider industrial customer base
and international commercial support functions. The integration
with Antenova is expected to realise operational and revenue
synergies over time, following an initial investment to support
scalability, with the acquisition exceeding the Group's stated
returns target within four years.
The acquisition is expected to be immediately accretive to the
Group's underlying operating margin and accretive to underlying
earnings in the first full year post completion. The Group's
proforma gearing(2) as at 31 March 2023 increases from 1.0x to 1.6x
with our long term target range being between 1.5 and 2.0x. The
pipeline of acquisition opportunities in development remains
strong.
Nick Jefferies, Group Chief Executive of discoverIE plc,
said:
"The acquisition of 2J continues our strategy of building a
differentiated, international, growth focused electronics group
with strong operating margins. The transaction brings another high
quality business into discoverIE, which will be accretive to both
underlying earnings and margins.
2J is a business that we have known for some time, with a strong
product range and engineering capability that is highly
complementary to our existing Antenova business. By bringing the
two businesses together, they will gain access to a greater number
of industrial connectivity target customers with a broader product
range and wider commercial support functions. We have invested in
additional management to scale up the business and achieve
operating synergies.
The industrial wireless connectivity market is an exciting one
with excellent growth prospects and the acquisition of 2J increases
discoverIE's opportunities in the faster growing markets of the
Industrial Internet of Things (IIoT), robotics and artificial
intelligence (AI) controlled industrial systems.
We are delighted to welcome the 2J team to the discoverIE
Group."
For further information please contact:
discoverIE Group plc 01483 544 500
Nick Jefferies, Group Chief Executive
Simon Gibbins, Group Finance Director
Lili Huang, Head of Investor Relations
Buchanan 020 7466 5000
Chris Lane, Toto Berger, Jack Devoy
discoverIE@buchanan.uk.com
Notes
1. 2J was owned by 2J Holdings sro which was jointly owned by
Benoit Tourres (Chairman) and Janette Jarvie (Chief Executive
Officer). Mr Tourres and Ms Jarvie will remain with the
business.
2. Gearing ratio is defined as net debt divided by underlying
EBITDA (annualised for acquisitions, excluding IFRS16).
3. The information contained within this announcement is deemed
by the Group to constitute inside information as stipulated under
the Market Abuse Regulation, Article 7 of EU Regulation 596/2014.
Upon the publication of this announcement via Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Notes to Editors:
About discoverIE Group plc
discoverIE Group plc is an international group of businesses
that design and manufacture innovative electronic components for
industrial applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally through its two
divisions, Magnetics & Controls, and Sensing &
Connectivity. By designing components that meet customers' unique
requirements, which are then manufactured and supplied throughout
the life of their production, a high level of repeating revenue is
generated with long-term customer relationships.
With a focus on sustainable key markets driven by structural
growth and increasing electronic content, namely renewable energy,
medical, electrification of transportation, and industrial
automation & connectivity, the Group aims to achieve organic
growth that is well ahead of GDP and to supplement that with
complementary acquisitions. The Group is committed to reducing the
impact of its operations on the environment with an SBTi aligned
plan to reach net zero. With its key markets aligned with a
sustainable future, the Group has been awarded an ESG "AA" rating
by MSCI and is Regional (Europe) Top Rated by Sustainalytics.
The Group employs c.4,700 people across 20 countries with its
principal operating units located in Continental Europe, the UK,
China, Sri Lanka, India and North America.
discoverIE is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE250, classified within the
Electrical Components and Equipment subsector.
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END
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(END) Dow Jones Newswires
September 13, 2023 02:00 ET (06:00 GMT)
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