Volex plc
Acquisition of GTK
11 December 2018
Volex plc ("Volex" or the "Company"), the global provider of cable assemblies, is pleased to announce the acquisition of GTK (Holdco) Limited ("GTK"), a UK-based manufacturer of customised electronic solutions including cable assemblies, displays and connectors, for a total consideration of approximately £14.3 million. GTK is currently owned by funds administered by YFM Equity Partners and its management team.
GTK is headquartered in Basingstoke and has operations in the UK, Romania and Taiwan. In business for over 25 years, it has more than 300 active customers and is focused on the Northern European market.
For the year ended 31 July 2018, GTK reported audited revenues of £15.8 million and a pre-exceptional operating profit of £1.7 million. Revenue has increased by 49 per cent over the last three years, representing an annual growth rate of 14.2 per cent. On completion, GTK had cash on balance sheet of £1.3 million.
Volex has acquired GTK for a total consideration of approximately £14.3 million, representing a 5.7 times multiple of adjusted historical operating profit.(1) The consideration has been satisfied by a £12.5 million payment in cash, and the balance by the issue of 2,124,016 new ordinary shares of 25 pence each in the Company (the "Consideration Shares"). The Consideration Shares are subject to a six-month lock-up.
Nat Rothschild, Executive Chairman of Volex, commented:
"This acquisition, which is immediately accretive to our earnings per share, represents an important next step in expanding Volex's market-leading cable assemblies division. Furthermore, GTK's business introduces important new capabilities to our group, and brings new customer relationships, a highly skilled European-based sales and engineering team, and innovative new products. In addition, I am very pleased that Volex is back manufacturing in the UK after a gap of over 10 years."
Application has been made to the London Stock Exchange for the admission of the Consideration Shares to trading on AIM ("Admission"). Admission is expected to take place at 8.00am on 14 December 2018.
Following the issue of the Consideration Shares, the issued share capital of the Company will comprise 147,367,933 ordinary shares of 25 pence, each with one voting right. The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014.
Note:
(1) Historic audited operating profit has been adjusted for the purposes of this calculation to add back goodwill amortisation, one-off charges and certain shareholder costs that will not continue under Volex ownership.
Enquiries
For further information please contact:
Volex plc Tel: 07909 995 887
Nat Rothschild, Executive Chairman
Daren Morris, Chief Financial Officer and Company Secretary
Liberum Tel: 020 3100 2222
Financial Adviser
Karri Vuori
Nominated Adviser & Broker
Steve Pearce
Euan Brown
Quercus Corporate Finance LLP
Adviser to GTK
Amanda Hall Tel: 07973 417 087