LONDON (Alliance News) - Industrial services provider Cape PLC on Thursday said it has struck a deal to acquire Redhall Engineering Solutions Ltd from AIM-listed manufacturing and engineering services company Redhall Group PLC for GBP6 million.
Cape will fund the deal from its existing debt facilities and expects the deal to be earnings accretive in the current financial year.
Redhall Engineering primarily operates in the downstream oil and gas sector, providing maintenance services including pipe welding, tank repair and shutdown services.
"The acquisition of Redhall Engineering is in line with our strategy to broaden the Group's portfolio by adding adjacent services and will allow Cape to offer a broader range of maintenance services to our key clients within the UK," said Cape Chief Executive Joe Oatley.
Redhall said the sale of the business will allow it to focus on higher-margin manufacturing work, particularly in the nuclear and oil and gas markets.
The sale is in line with a strategic review Redhall has been conducting since December, which will also see the company exit a number of framework contracts in its loss-making site-based nuclear contracting business. As a result of this withdrawal, Redhall expects to book exceptional costs of GBP2.2 million in the financial year to the end of September, related to associated redundancies, closure costs and asset write-offs.
Shares in Cape were down 0.6% to 255.644 pence on Thursday morning, while shares in Redhall were up 15% to 11.20 pence, one of the best performers in the AIM All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
