TIDMPRES
RNS Number : 2575R
Pressure Technologies PLC
08 December 2016
8 December 2016
Pressure Technologies plc
("Pressure Technologies", the "Company" or the "Group")
Acquisition of Martract Limited
("Martract" or the "Acquisition")
Pressure Technologies is pleased to announce that it has on 7
December 2016 acquired the entire issued share capital of UK based
Martract Limited, a profitable, cash generative engineering
business that specialises primarily in the grinding and lapping of
ball and seat assemblies and gate valves. Martract is a highly
specialist, niche business and the market leader in its field
through its unrivalled intellectual property and strong
longstanding customer relationships. The business is well known to
the Group and has been a key supplier into the Precision
Engineering Division ("PMC") for over 15 years. The Acquisition is
a strong strategic fit with the PMC Division, it will join the
other businesses in this division; Roota Engineering, Al-Met and
Quadscot. Martract will help to vertically integrate the supply
chain and further strengthen our ability to supply bespoke, complex
solutions to industries demanding more innovative solutions to
increasingly challenging problems.
Highlights
-- Martract's vertical integration with Roota is expected to
reduce lead-times and minimise supply chain risk
-- The Acquisition will enable the expansion of relationships
with existing PMC customers and reduce competition
-- Approximately 60% of Martract's revenue is generated outside of the oil and gas market
-- Martract is a cash generative and profitable business with
good near term order book visibility
-- The Board is confident of realising further potential for the
business through the expansion into international markets, as the
current sales focus is primarily the UK
-- The Board expects that the Acquisition will be immediately earnings enhancing
Terms of the Acquisition
The maximum total consideration for the Acquisition is GBP4.3
million on a cash free, debt free basis, comprising an initial cash
consideration of GBP3.7 million plus cash balances ("Initial
Consideration") and a conditional deferred payment of up to GBP0.6
million ("Additional Consideration"). The Additional consideration
payable in respect of the 12 month period following the Acquisition
(the "Earn-out Period") is dependent on the future EBITDA
performance of Martract. The Initial Consideration will be met from
the Group's existing bank facilities and cash.
Key directors of the business will remain as consultants during
the Earn-out Period.
Information on Martract and background to and reasons for the
Acquisition
Established in 1978, Martract is a profitable, cash generative
business that benefits from good near term order book visibility
and strong customer loyalty. The Board expects that the Acquisition
will be immediately earnings enhancing. For the year ended 31
August 2016 Martract had unaudited revenues of GBP1.2 million and
adjusted proforma EBITDA of GBP0.45 million.
Martract has significant technical capability and intellectual
property. It employs IP that achieves tight tolerances of
sphericalness in the case of ball valves and flatness in the case
of gate valves. This guarantees sealing of valves at very high
pressures and Martract's IP has been proven to extend the
operational life of products many times over; in this area the
Board believes it has very few, if any, competitors. All existing
operational management and employees will be retained in the
business. The work that Martract currently undertakes for its
customers is highly complementary to the PMC Division and will
further embed our niche capability for valve components in
demanding applications as well as extending the division's market
reach.
Martract's revenue in 2016 was derived 40% from the oil and gas
market and 60% from other diverse sectors. The Board believes that
Martract has further potential that can be realised as part of the
Group.
The Acquisition of Martract is a strategic move, which the Board
believes has three main benefits.
Firstly, within PMC's oil and gas customers there will be an
opportunity to expand existing relationships as well as develop new
ones; as Martract will be vertically integrated within Roota
offering a manufactured and ground product solution the quality of
which is unmatched by any known competitor. In addition, the
acquisition will shorten the supply chain, substantially increasing
the division's competitive advantage as well as reducing product
lead-times.
Secondly, Martract has traditionally focused on the UK market
and the Board sees considerable potential to further develop
international markets as part of the Group.
Thirdly, Martract's business is not wholly reliant on the oil
and gas market and currently has customers across a number of other
sectors including nuclear and wide-reaching industrial sectors. It
is anticipated that the division's businesses will be able to
capitalise on Martract's position in these markets.
John Hayward, CEO of Pressure Technologies, said:
"This is an exciting acquisition for the Group, which
strengthens our existing market position and gives significant
opportunity to penetrate new markets. Martract's reputation for
technical ability and quality sits well with our Group capabilities
and we are delighted to welcome its dedicated and highly-skilled
workforce to the Group."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information, please contact:
Pressure Technologies plc Tel: 0114 257 3622
John Hayward, Chief Executive www.pressuretechnologies.com
Jo Allen, Group Finance Director
Keeley Clarke, Investor Relations
Cantor Fitzgerald Europe (Nominated Tel: 020 7894 8337
Adviser and Broker)
Philip Davies / Will Goode
Tavistock Tel: 020 7920 3150
Simon Hudson
COMPANY DESCRIPTION
Company description - www.pressuretechnologies.com
With its head office in Sheffield, Pressure Technologies was
founded on its leading market position as a designer and
manufacturer of high-pressure systems serving the global energy,
defence and industrial gases markets. Today it continues to serve
those markets from a broader engineering base with specialist
precision engineering businesses and has a worldwide presence in
Alternative Energy as a global leader in biogas upgrading. On this
foundation, the company is building a highly profitable group of
companies through a combination of organic initiatives and
acquisitions.
Pressure Technologies has four divisions, Precision Machined
Components, Engineered Products, Cylinders and Alternative Energy,
serving four markets: oil and gas, defence, industrial gases and
alternative energy.
Precision Machined Components
-- Al-Met, Mid Glamorgan, acquired in 2010 www.almet.co.uk
-- Roota Engineering, Rotherham, acquired in March 2014 www.roota.co.uk
-- Quadscot, Glasgow, acquired in October 2014 www.quadscot.co.uk
-- Martract Limited, acquired in December 2016 www.martract.co.uk
Engineered Products
-- Hydratron, Manchester and Houston, acquired in 2010 www.hydratron.com
Cylinders
-- Chesterfield Special Cylinders, Sheffield, IPO cornerstone in
2007 www.chesterfieldcylinders.com
-- Kelley GTM Manufacturing, Amarillo - 40% stake acquired by
the Group in December 2013 www.kelleygtm.com
Alternative Energy
-- Chesterfield BioGas, Sheffield, founded in 2008. Renamed
Greenlane Biogas UK on 5 June 2015.
-- Greenlane, Vancouver, Canada and Auckland, New Zealand,
acquired in October 2014 www.greenlanebiogas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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