LONDON (Alliance News) - Acal PLC said Thursday that it had agreed to acquire electromagnetic products manufacturer Noratel AS of Norway for GBP73.5 million in cash and assumed debt.
The electronics supplier raised its annual dividend to 9.35 pence from 8.50 pence, as it saw profit improve in the year to end-March.
Acal posted a pretax profit of GBP4.2 million, up from GBP700,000, as revenue rose to GBP211.6 million from GBP177.4 million, excluding revenues from the company's discontinued supply chain business.
Including revenues from the discontinued operations, revenues rose less dramatically to GBP229.5 million from GBP219.2 million.
Acal said that on Monday that it sold the final part of its supply chain division, its enterprise services business. It had previously sold its European and UK parts businesses.
The company said that following the latest disposal, it is now wholly focused on specialist electronics.
Revenue growth in the recent financial year was driven by a strong second half, boosted by economic recovery in several major Eurozone economies, Acal said, as sales in both Germany and Italy rose by 13%, and by 10% in France, offsetting an 11% decline in Spain. The UK recovered less quickly, however, seeing sales drop 3% in the second half.
Acal said that its new financial year had started well, with sales growth driven by a strong order book, and orders remaining at similar levels to the previous year.
"Whilst overall market growth rates remain relatively low, the business is well positioned to benefit from improving market conditions, enhanced by further quality acquisitions," Chief Executive Nick Jefferies said in a statement.
Acal said it will acquire Trafo Holdings AS, which trades as Noratel, for NOK735 million, equivalent to GBP73.5 million, using funds from a proposed rights issue of shares and from a new revolving debt facility. The initial payment is NOK291.88 million, or GBP29.2 million, in cash, plus share worth GBP0.8 million.
Acal proposed a one-for-one rights issue to raise GBP55 million, with each rights share offered at 176 pence. Acal said this price offers a discount of around 49.0% on the company's closing middle market price June 4. Shares in Acal were trading down 1.5% at 340.00 pence Thursday midday.
Acal also has put in place a GBP70 million revolving credit facility, partly to finance the acquisition, partly to refinance Noratel's GBP43.5 million in debt, and partly to refinance its own existing facilities of GBP24 million.
Acal said that the acquisition would help to enhance its product capabilities and expand its geographic position. It recommended shareholders vote in favour of the transaction at its annual general meeting scheduled for June 23, saying that it believes both the acquisition and rights issue are in the company's "best interests."
The company acquired Myrra Group, Young Electronics Group and RSG Electronic Components GmbH during the recently completed year.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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