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(Sharecast News) - Renold, the AIM-listed supplier of industrial chains, has announced it is spending AU$6m (£3.1m) to buy Melbourne-based high-quality conveyor chain (CVC) maker Davidson Chain.
The acquisition will build on Renold's existing market position within the Australian CVC market, and provides opportunities for manufacturing synergies between the two companies.
"The Davidson acquisition demonstrates further strategic momentum, supplementing organic growth through high quality bolt-on acquisitions which can expand our geographic presence, grow our product offering and strengthen our market position in key end markets," said Renold's chief executive Robert Purcell.
Davidson, which was acquired on a cash free, debt free basis and funded from existing borrowing facilities, is thought to immediately benefit Renold's earnings per share and lift operating margins.
The valuation represents 5.9x Davidson's EBITDA, though this will reduce to 5x because of expected synergies.
The stock was up 4.7% at 30.41p by 0839 in London.
