Acquisition

RNS Number : 1343Z

Chemring Group PLC

16 September 2009

 



FOR IMMEDIATE RELEASE                                                                                         16 SEPTEMBER 2009

CHEMRING GROUP PLC

ACQUISITION OF HI-SHEAR TECHNOLOGY CORPORATION 

Chemring Group PLC ('Chemring' or 'the Group') announces that it has entered into a conditional agreement to acquire the entire issued stock capital of Hi-Shear Technology Corporation ('Hi-Shear'), a US public company traded on the NYSE AMEX, for a cash consideration of $19.18 per share equating to $132 million (£80 million). 

Description of the business and reasons for the acquisition 

Hi-Shear, based in Los Angeles, USA, is a leading manufacturer of high reliability energetic solutions that perform critical functions in key US space and defence programmes, including satellites, space launch vehicles, missile defence and aircrew egress. Its products include low shock pyrotechnic satellite separation systems, space-qualified initiators, electronic missile safe/arm devices and acoustic initiators for underwater explosive ordnance disposal (EOD) applications. 

In the year ended 31 May 2009, Hi-Shear reported an audited profit before tax and non-recurring items of $12.0 million (£7.3 million) on revenue of $25.9 million (£15.7 million). Gross assets as at that date were $23.8 million (£14.4 million). The acquisition is expected to enhance Chemring's earnings in the first full financial year post-completion.*

The acquisition of Hi-Shear creates a Group-wide centre of excellence in advanced initiation technologies, which are critical elements of next generation missile systems such as the advanced Patriot 'PAC-3' anti-ballistic missile and have an important role in a range of modern weapons and energetic sub-systems including aircraft ejection seats and unmanned systems. Furthermore, Hi-Shear's leading US position in space and satellite separation is one which it can grow by accessing European satellite manufacturers and by adding additional technologies such as Chemring's range of linear explosives for cutting and stage separation. Finally, Hi-Shear's remote acoustic EOD initiator fits with Chemring's existing range of encoded radio-frequency initiators for EOD applications.   

Principal terms of the acquisition  

The cash consideration of $132 million (£80 million) will be funded utilising a new committed facility with Lloyds Banking Group. 

Completion, which is anticipated in the fourth quarter of 2009, is conditional upon, inter alia, US regulatory and Hi-Shear shareholder approvals.

Commenting on the acquisition, David Price, Chief Executive of Chemring, said:

'The acquisition of Hi-Shear considerably extends Chemring's capabilities as an advanced engineering business, and creates a strong platform for growth in the space and missile defence markets. I am confident that its unique capabilities in pyrotechnics, mechanical and electronic engineering combined with our existing strengths in energetic materials and sub-systems will create a world leader in these markets.'

 * This statement should not be taken to mean that the earnings per share of Chemring will necessarily match or exceed the historical reported earnings per share of Chemring and no forecast is intended or implied.

For further information:

Dr David Price        Chief Executive, Chemring Group PLC     01489 881880

Paul Rayner            Finance Director, Chemring Group PLC   01489 881880

Rupert Pittman        Cardew Group                                           0207 930 0777 

 

END

 

 

ACQEAKNKFAXNEEE