Acquisition

Chemring Group PLC 23 January 2001 CHEMRING GROUP PLC ACQUIRES US DECOYS BUSINESS Chemring Group PLC ('Chemring') announces that it has signed a binding agreement to acquire Alliant Kilgore Flares Company, LLC ('Kilgore'), a subsidiary of Alliant Techsystems Inc. Description of the business and reasons for the acquisition Kilgore, based in Toone, Tennessee USA, is the largest supplier of conventional infra-red decoys to the United States Department of Defense. In the year to 31 March 2000 the unaudited sales of Kilgore were US$21.7 million and the unaudited operating profit before exceptional items was US$0.1 million (operating loss after exceptional items was US$1.6 million). At 31 March 2000, Kilgore had unaudited net assets of US$17.5 million. Kilgore currently has a healthy order book of US$38 million. The operating performance of Kilgore for the year to 31 March 2000 was significantly lower than historical performance due to a voluntary suspension of production operations in mid 1999 to improve facilities and methods. This followed an incident arising during flare composition assembly. The necessary investment is now complete and the facilities are fully operational. Kilgore's products are complementary to the range of advanced decoy products of Alloy Surfaces, Chemring's other US subsidiary. Kilgore is also developing new products and has recently been awarded an infrared decoy development contract for the US F22 aircraft. The US is an attractive market where there is increasing emphasis on electronic warfare and the protection of valuable military platform. Additionally, the acquisition complements Chemring's existing UK business and strengthens significantly its ability to compete in the expanding international decoy market. The acquisition is expected to be earnings enhancing in this financial year. This statement should not be interpreted to mean that Chemring's future earnings per share will necessarily be greater than the historic earnings per share. Principal terms of the acquisition The consideration of US$23.0 million will be satisfied by the issue of 1,200,000 new Chemring ordinary shares and a balancing cash payment of US$17.8 million. The cash payment will be made from new bank facilities. The consideration will be subject to adjustment depending on the audited net assets of Kilgore on completion of the acquisition. It is expected that the acquisition will be completed in early February 2001. Commenting on the acquisition, Ken Scobie, Chairman of Chemring, said: 'Chemring Countermeasures is recognised as the world leader in the rapidly expanding expendable countermeasures market, with its US subsidiary, Alloy Surfaces, and its UK Countermeasures business. The acquisition of Kilgore will significantly strengthen our presence both in the United States and internationally in the air decoy market.' Today, Chemring also announced its preliminary results for the year ended 31 October 2000. Hawkpoint Partners Limited advised Chemring on the acquisition. Enquiries Chemring Group PLC David Evans, Chief Executive Tel: 01489 881 880 Paul Rayner, Finance Director Cardew & Co Jonathan Rooper Tel: 020 7930 0777 Hawkpoint Partners Limited, which is authorised by The Securities and Futures Authority Limited, is acting exclusively for Chemring in connection with the acquisition and no one else, and will not be responsible to anyone other than Chemring for giving the protections afforded to customers of Hawkpoint Partners Limited or for giving advice in relation to the acquisition.
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