Acquisition/Placing
Gooch & Housego PLC
18 September 2000
Gooch & Housego PLC
'Acquisition of a major supplier to the World Q-switch
market'
Gooch & Housego PLC ('G&H'), the specialist manufacturer
of precision optical components and bespoke glass
engineering items, acoustic-optic devices and instruments
for measuring optical radiation, today announces the
acquisition of Neos Technologies Inc ('Neos') and a
Vendor Placing to raise £2.6 million.
Highlights
* Acquisition of Neos, a major Q-switch manufacturer
based in the US, for $6.4 million.
* Unaudited management accounts for Neos for the year
to 31 July 2000 show sales of $6.1 million and pre-tax
profits of $1.35m.
* Acquisition will considerably strength G&H's
position in the Word Q-switch market as well as improving
G&H's access to the US market for existing products
range.
* Vendor Placing of 1,095,000 new Gooch & Housego
shares at 240p to raise £2.6m.
* Placing of 300,000 Directors' shares.
* Current trading in line with expectations.
Archie Gooch, Chairman and Founder of G&H said
'We are delighted to have made this strategically
important acquisition. Neos' product range is
complementary with our own and I am particularly pleased
that we have acquired the patent for Neos' Q-switch,
which contains crystal quartz, for use in diode pumped
systems. There is a new and growing demand for this type
of switch'.
For further information please contact:
Gooch & Housego 01460 52271
Archie Gooch, Executive Chairman
Ian Bayer, Finance Director
Buchanan Communications 020 7466 5000
Tim Thompson
The Board of Gooch & Housego is pleased to announce the
acquisition of Neos for $6.4million. The acquisition is
being financed by £1.9m in cash and the issue of
1,095,000 new G&H ordinary shares to the Vendors. The
Vendors interests have today been placed by Charterhouse
Securities at 240p per share. On completion, G&H will
acquire 96.13 per cent of Neos' issued share capital.
The Minority Interests will be purchased or compulsorily
acquired in accordance with the laws of Florida and G&H
therefore expects to own 100 per cent. of Neos by, at
latest, 31 December 2000.
Neos was founded in 1982 and is based in Florida with 46
employees. It manufactures Q-switches and other acousto-
optic devices and together with G&H is the major supplier
to the world Q-switch market. The unaudited Management
Accounts for Neos for the year ended 31 July 2000 show
sales of $6.1m and pre-tax profits of $1.35m. Under the
terms of the acquisition agreement G&H will pay $6.4m on
completion less the amount due to the Minority Interests
of which $1.9m will be held in escrow; £1.4m until
completion of the audited accounts for the year ended 31
July 2000, and $0.5m until 30 November 2001.If the
audited profits for the year to July 2000 fall short of
$1.35m, the consideration will be reduced by 5.5 times
the amount of any such shortfall. The Vendors have
warranted net assets of not less than $3.0m as at 31 July
2000.
In the year to July 1999 Neos suffered similar problems
to those experienced by G&H caused by capacity
difficulties in the electronics industry in Japan and the
Far East. Sales fell to $3.7m from $4.7 achieved in
1998., and similarly pre-tax profits were reduced from
$1m to $0.6m. Since 1999 Neos has benefited from the
subsequent improvement in market conditions also enjoyed
by G&H.
The acquisition will considerably strengthen G&H's
position in the World Q-switch market and will also
improve both G&H's access to the US market for its
existing product range and Neos' access to European
markets. In addition, there is scope for substantial
savings in the cost of manufacture as G&H will be able to
supply almost all of the optical components, which Neos
currently subcontracts.
The principal vendors of Neos are Ed Young, President,
and Bob Belfatto, Vice-President. They have agreed to
remain with the business and have signed service
contracts for 1 year and 2 years respectively. We are
looking forward to working with them to strengthen and
enlarge the combined business of the Group.
Concurrent with the Vendor placing, three of the
Company's Directors have sold shares which have been
placed with Institutional Investors at a price of 240p
per ordinary share. A.W.Gooch has sold 150,000 shares
reducing his holding to 1,516,008 shares representing
8.42% of the enlarged issued share capital., Mrs.H.Virgin
has sold 75,000 shares reducing her holding to 3,403,226
shares representing 18.9%, and D.E.Irish has sold 75,000
shares reducing his holding to 998,206 shares
representing 5.55%. In addition, A.W.Gooch and Mrs. H.
Virgin have a non-beneficial interest in the 2,999,880
shares held by the Gooch / Virgin Discretionary Trust,
and in 200,000 shares held by a charitable trust.
Since G&H reported its interim results in June 2000,
trading has continued to be in line with expectations in
all areas of the Group's business. Within our current
operations the G&H Ilminster business has received an
initial order of £200,000 for crystal optical components
for use in Telecommunications systems in the US. The
customer has indicated that this is likely to be followed
by regular, more substantial orders.
Current trading, together with the strategically
important acquisition of Neos, gives the Board
considerable confidence in the future prospects of the
Group.
Application has been made for the new G&H shares to be
admitted to dealing on the Alternative Investment Market.
Dealings are expected to commence on 21 September 2000.