Acquisition

RNS Number : 4595S

Diploma PLC

10 September 2010

 



DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

10 September 2010

DIPLOMA PLC

DIPLOMA ACQUIRES AN OEM SEALS BUSINESS IN THE UNITED STATES AND A 
HEALTHCARE BUSINESS IN AUSTRALIA

Diploma PLC, the international group of businesses supplying specialised technical products and services, is pleased to announce the acquisition of 100% of All Seals Inc ("All Seals") for a maximum consideration of £7.8m (US$11.9m), before expenses.  On 30 July 2010, Diploma PLC also completed the acquisition of 80% of Big Green Surgical Company Pty Limited ("BGS") for a maximum consideration of £1.4m (A$2.4m), before expenses.

All Seals Inc

All Seals is a well established supplier of O rings and custom moulded seals to Industrial OEM customers across a range of specialist applications in aerospace, medical, agriculture and general manufacturing industries.  All Seals employs 22 staff and operates from a leased facility in Santa Ana, California in the United States.

All Seals will join the Hercules Fluid Power Group ("HFPG"), Diploma's North American Seals Group, alongside HFPG's other OEM seal business, RT Dygert.  All Seals and RT Dygert will be complementary businesses within HFPG as All Seals sells ca. 75% of its product in California and the South Western states of the US, while RT Dygert is concentrated in the Mid-West.

At the time of acquisition, All Seals was owned by Mr J Barnett who will remain as an Executive until 31 December 2010, and thereafter be available as a consultant to the business. 

Unaudited revenues of All Seals in the year ended 31 December 2009, when industrial markets were particularly weak, were US$7.8m (£5.1m).  In the first eight months of 2010, revenues have rebounded strongly and are ca. 30% ahead of the prior comparable period. 

The initial cash consideration for All Seals will be US$10.5m (£6.9m), which will be met from the Group's existing cash resources.  This may be subject to minor adjustment based on the net assets at completion.  Further deferred consideration up to an aggregate maximum of US$1.4m (£0.9m) may be payable in 2011, depending primarily on the operating profit out-turn of the business in the year ending 31 December 2010. 

Big Green Surgical Company Pty Limited

BGS is a specialised distributor of electrosurgery consumables and equipment supplied to both public and private hospitals in Australia and New Zealand.  The business is a smaller, more narrowly focused version of the Group's existing AMT Electrosurgery business in Canada and shares a number of common suppliers.  BGS employs 6 staff and operates from a small leased facility in Newcastle, close to Sydney in New South Wales, Australia.

At the time of acquisition, BGS was jointly owned by Mr & Mrs A Bennett and Mr Bennett will remain in place as Managing Director following the acquisition for a minimum period of three years.   BGS will report directly into the management team of Diploma's Canadian Healthcare businesses.

In the year ended 30 June 2010, BGS reported unaudited revenues of A$3.4m (£2.0m).  The initial consideration paid for 80% of the share capital was A$2.4m (£1.4m).  The outstanding 20% of shares will be retained by the Managing Director for three years and be subject to put/call options, based on an agreed multiple of operating profit.

The Board expects both acquisitions to be immediately earnings enhancing for the Group.

Bruce Thompson, Chief Executive of Diploma PLC said:

"The acquisition of All Seals is an important addition to our developing OEM Seals business in North America.  The BGS acquisition, although relatively small, is strategically important in opening up new geographic opportunities for our established Healthcare business."

For further enquiries please contact:
Bruce Thompson, Chief Executive Officer	020 7549 5700
Nigel Lingwood, Group Finance Director	020 7549 5705
Simon Bloomfield, Bankside Consultants	020 7367 8861

NOTE TO EDITORS:

Diploma PLC is an international group of businesses supplying specialised technical products and services to the Life Sciences, Seals and Controls industries.

Diploma achieves stable growth and attractive margins from its focus on supplying specialised technical products to markets which value high levels of customer service, technical support and value adding activities.  A high proportion of revenues are generated from essential products and services funded by operating, rather than capital budgets.

The Group employs ca. 825 employees and its principal operating businesses are located in the UK, Germany, US and Canada.

Over the last five years, the Group has grown adjusted earnings per share at an average of ca. 16% p.a. through a combination of organic growth and acquisitions.  The current market capitalisation is ca. £290m.

 

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