Acquisition

RNS Number : 9022F

Renold PLC

17 November 2015

 

Renold plc

("Renold", "the Company" or "the Group")

Proposed acquisition of Aventics TC ("the Acquisition")

Renold, a leading international supplier of industrial chains and related power transmission products, is pleased to announce that it has signed a conditional sale and purchase agreement to acquire the business and trading assets of Aventics Tooth Chain ("Aventics TC"), an operating division of Aventics Gmbh based in Germany, for up to €6.3 million (£4.5 million) in cash.

The consideration (on a cash and debt free basis) will be satisfied by an initial payment of €4.8 million at completion followed by further expected payments of up to €1.5 million over the two year period following completion, contingent on achieving certain sales targets. All payments will be satisfied from the Group's existing banking facilities. Completion of the Acquisition is expected to occur after the statutory 'TUPE' consultation period with the employees in Germany and after certain carve out activities have been completed to separate the business from Aventics.

As a division of Aventics Gmbh, Aventics TC does not prepare separate audited accounts. Based on financial information obtained by Renold during the due diligence process, third-party sales in the year to 31 December 2014 were €7.5 million (£5.3 million). In addition, approximately €1.5 million (£1.0 million) of sales were delivered indirectly via other Aventics group companies and plans are in place to transition this indirect business to Renold as part of the post closing process. On a proforma basis, Aventics TC made an operating profit before exceptional items of €1.1 million (£0.8 million) in the year ended 31 December 2014. Gross assets at that date were €1.7 million (£1.2 million).

Renold anticipates that the Acquisition will be broadly neutral for adjusted earnings in the current financial year, as a result of the business separation costs to be incurred, but should be earnings enhancing thereafter. The Acquisition constitutes a Class 2 transaction for the purposes of the UK Financial Authority's Listing Rules and, as such, does not require Renold shareholders' approval.

Aventics TC

Aventics TC is the market leader in the manufacture of inverted tooth chain for industrial applications. Tooth chain is a specialist product not currently manufactured by Renold and is typically seen in applications such as bottling plants and other manufacturing facilities and equipment. The business employs 65 people and operates from a self-contained rented facility in Gronau, Lower Saxony with its own dedicated manufacturing, engineering and sales teams. Two thirds of Aventics TC sales are currently made in Germany with the balance of sales being made in a wide range of international territories including other western European countries, the USA and China. The business operates as a niche division of Aventics Gmbh which specialises in pneumatics equipment and shares certain sales and back office processes with the Aventics Group as a whole.

Benefits of the acquisition

Through the Acquisition of Aventics TC, Renold will gain access to a high value-added product not currently part of the Renold offering. Renold expects to expand sales through the existing Renold global sales presence and network which will allow access to a much wider geographical market than currently. In addition, as the factory is close to Renold's plant in Einbeck, Germany, the business will be able to share expertise and some infrastructure services within the more substantial Renold Group.

Robert Purcell, Chief Executive of Renold, said:

"The purchase of Aventics TC is an excellent fit with Phase 3 of our STEP 2020 Strategic Plan (the 'Acquisitions' Phase). Aventics TC manufactures a specialist, high quality product which will expand our existing product offering whilst Renold's international footprint will, over time, give the Tooth Chain business access to new customers and geographies."

17 November 2015

ENQUIRIES:

Renold plc	0161 498 4500
Robert Purcell, Chief Executive
Brian Tenner, Finance Director
Arden Partners	020 7614 5917
Chris Hardie
Instinctif Partners	020 7457 2020
Mark Garraway
Helen Tarbet

NOTES FOR EDITORS

Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a well deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.

Further information about Renold can be found on the website at: www.renold.com

 

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