Strix Group PLC Completion of Acquisition (2412S)
March 08 2019 - 1:00AM
UK Regulatory
TIDMKETL
RNS Number : 2412S
Strix Group PLC
08 March 2019
8 March 2019
Strix Group Plc
("Strix" or the "Group")
Completion of Acquisition
As previously announced on 7 February 2019, Strix Group Plc
(AIM: KETL), the global leader in the design, manufacture and
supply of kettle safety controls and other complementary water
temperature management components, confirms that, following
approval by HaloSource Corporation ("HaloSource") shareholders at
the general meeting held on 26 February 2019, the acquisition of
specified assets from HaloSource has now completed. Strix has
entered into an asset purchase agreement with HaloSource, pursuant
to which it will acquire specified assets relating to HaloSource's
HaloPure division and its Astrea product, for total consideration
of US$1.33 million (the "Acquisition").
The Board of Strix believe that the Acquisition represents an
opportunity to acquire extensively developed technology, which is
complementary to its Aqua Optima division, at an attractive price,
as well as gaining access to skilled research and development
resource in the USA. Strix will continue the process of
commercialising the technology and products that it has acquired,
leveraging its experience of operating in the water filtration
sector and bringing to market new consumer products.
Strategic Rationale
The Board consider that the medium term opportunities presented
by the Acquisition include:
- Integration and commercialisation of HaloSource's technically
advanced water purification technologies within Strix
to expand existing product portfolio and market penetration.
- An expanded operational presence for Strix, including
the creation of an innovation centre for water filtration
in the USA utilising the high quality R&D staff transferring
from HaloSource.
- Additional customer and supplier relationships in China
for the water filtration division.
- Expansion and enhanced differentiation of the Aqua Optima
product range, using HaloSource developed technology.
- Potential for operational synergies in China, including
the utilisation of Strix's new and larger manufacturing
facility scheduled to be operational during 2021.
- Opportunity for additional revenue generation in a range
of markets worldwide, both by marketing the acquired technologies
and products on a standalone basis (including to existing
Strix customers), and by improving Strix's existing product
portfolio utilising the acquired technologies.
- Ongoing development of the existing advanced water purification
technology to address specific market requirements and
develop a range of products that remove impurities to
deliver safe drinking water to consumers globally.
History of HaloSource and description of the assets being
acquired
HaloSource has attracted and deployed significant investment
over the past 20 years, and as a result, has developed two
technically advanced water purification technologies that are being
acquired by Strix pursuant to the Acquisition.
HaloSource has two primary patented technologies - a bromine
based water treatment bead system proven to kill 99.99%+ of
bacteria and viruses, and a composite filter material certified to
remove heavy metals from water, with its main differentiator being
its lead removal performance.
HaloSource has also developed a consumer product (Astrea) using
its filter technology. This product is a reusable portable water
bottle with changeable filters that is certified to remove lead
from tap water. Lead removal is a major differentiator in the USA
in particular, where a number of health scares have occurred due to
lead levels in drinking water.
Astrea allows consumers to obtain filtered drinking water at a
much lower cost per litre than bottled water, whilst avoiding the
negative environmental impact of plastic water bottle usage. Astrea
was launched in late 2018 and is available via a number of
distribution channels as a subscription product including the
delivery of regular replacement filters.
Financial Impact of the Acquisition
The Board currently anticipates that the Acquisition will result
in a net P&L investment by the group of approximately GBP2m in
the 2019 financial year, but that the Acquisition will be earnings
enhancing in the financial year to 31 December 2021. The Company
will provide further guidance as appropriate following a suitable
period of ownership.
Mark Bartlett, CEO of Strix Group Plc, commented: "We are very
pleased to be adding to our technology and product portfolios
through this acquisition of value adding assets. We maintain that
the USA is a key geography for us and this transaction offers us a
stronger presence in this market. As well as bringing additional
customer and supplier relationships, we see the opportunity to
provide increased differentiation to further expand our filtration
division."
Enquiries:
Strix Group Plc +44 (0) 1624 829 829
Mark Bartlett, CEO
Raudres Wong, CFO
Zeus Capital Limited (Nominated
Advisor and Joint Broker) +44 (0) 20 3829 5000
Nick Cowles / Jamie Peel / Jordan Warburton (Corporate Finance)
Canaccord Genuity Limited (Joint
Broker) +44 (0) 20 7523 8000
Chris Connors
IFC Advisory Limited (Financial PR
and IR) +44 (0) 20 3934 6630
Graham Herring / Heather Armstrong
/ Tim Metcalfe
ABOUT STRIX GROUP PLC
Isle of Man based Strix, is a global leader in the design,
manufacture and supply of kettle safety controls and other
components and devices involving water heating and temperature
control, steam management and water filtration.
Strix's core product range comprises a variety of safety
controls for small domestic appliances, primarily kettles. Kettle
safety controls require precision engineering and intricate
knowledge of material properties in order to repeatedly function
correctly. Strix has built up market leading capability and
know-how in this field since being founded in 1982.
Strix is listed on the Alternative Investment Market of the
London Stock Exchange (AIM: KETL).
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END
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