Acquisition

RNS Number : 3303H

Diploma PLC

13 March 2015

 

DIPLOMA PLC

                                           12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX

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FOR IMMEDIATE RELEASE

13 March 2015

DIPLOMA PLC

DIPLOMA ACQUIRES KUBO GROUP FOR A MAXIMUM

NET CASH CONSIDERATION OF £22.5m (CHF32.9m)

Diploma PLC, the international group of businesses supplying specialised technical products and services, is pleased to announce the acquisition of 100% of Rutin AG, the Swiss non-trading holding company of the Kubo Group ("Kubo") of companies based in Switzerland and Austria.

Kubo is a long established and leading supplier of seals, O-Rings, gaskets and moulded rubber parts to a large and diverse base of industrial customers in Switzerland and Austria. Kubo's principal location is in Effretikon, near Zurich in Switzerland, comprising a modern building with a combination of warehouse, manufacturing and office facilities. Kubo employs ca. 100 people, of which ca. 15 are based in the facility in Linz, Austria.

Kubo serves both the Industrial OEM and Aftermarket sectors, typically in applications that require a high degree of technical knowledge and support. The business specialises in high value products that address harsh environments or complex applications. Kubo also retains exclusive distribution rights in Switzerland and Austria for certain large international manufacturers of sealing products and O-Rings.

Prior to acquisition, Kubo was privately owned by Dr Thomas Raible, its Chief Executive Officer ("CEO") and majority shareholder, together with members of the Gebert family (Cyrill, Manuel and Rebecca, represented by Christa Gebert) and Dr Georges Bindschedler.  Of the Sellers, only Dr Raible had an active management role in Kubo and he will remain as the CEO of Kubo until 30 June 2015 to ensure a smooth management transition. 

Profit before tax for Kubo in the year ended 31 December 2014 was CHF4.9m (£3.4m) on revenues of CHF32.4m (£22.2m); gross assets at 31 December 2014 were CHF36.1m (£24.7m). 

The cash consideration before acquisition costs is CHF39.9m (£27.3m), which will be met from the Group's existing cash resources and revolving bank credit facility. At completion, net assets are expected to be approximately CHF30.3m (£20.7m), including net cash of approximately CHF7.0m (£4.8m) and goodwill of CHF11.6m (£7.9m).  Also included in the net assets is the freehold facility in Effretikon, with a net book value of CHF7.0m (£4.8m) and a market value of at least CHF10.0m (£6.8m).  

This transaction will be immediately earnings enhancing to the Company and will be reported as part of the Seals sector activities.

Bruce Thompson, Chief Executive of Diploma PLC said:

"The acquisition of Kubo Group fits very well with Diploma's strategy in Seals of building a stronger European business in the supply of seals, gaskets and related products to both the Industrial OEM and Aftermarket sectors. The acquisition will also open up opportunities for cross selling of products with Diploma's other Seals businesses, including access to Kubo's high precision, manufactured parts."

Diploma PLC -	[phone]
Bruce Thompson, Chief Executive Officer
Nigel Lingwood, Group Finance Director
Tulchan Communications -	[phone]
David Allchurch
Martin Robinson

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's businesses are focussed on supplying essential products and services which are funded by the customers' operating rather than their capital budgets, providing recurring income and stable revenue growth.

Our businesses design their individual business models to closely meet the requirements of their customers, offering a blend of high quality customer service, deep technical support and value adding activities. By supplying essential solutions, not just products, we build strong long term relationships with our customers and suppliers, which support attractive and sustainable margins.

Finally we encourage an entrepreneurial culture in our businesses through our decentralised management structure. We want our managers to feel that they have the freedom to run their own businesses, while being able to draw on the support and resources of a larger group.  These essential values ensure that decisions are made close to the customer and that the businesses are agile and responsive to changes in the market and the competitive environment.

The Group employs ca. 1,300 employees and its principal operating businesses are located in the UK, Germany, US, Canada and Australia.

Over the last five years, the Group has grown adjusted earnings per share at an average of 20% p.a. through a combination of organic growth and acquisitions.  Diploma is a member of the FTSE 250 with a market capitalisation of ca. £900m.

Further information on Diploma PLC, together with a copy of this Announcement, is available at www.diplomaplc.com

 

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