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LONDON (Alliance News) - Cable assembly maker Volex PLC said Thursday it will acquire cable harnesses firm Silcotec Europe Ltd in a cash-and-share deal worth EUR18.1 million and will raise GBP36.0 million through a share placing.
Volex will pay an initial EUR13.1 million in cash on completion, with a further EUR3.0 million satisfied through the issue of 3.5 million shares to the current owners. These shares will have a one year lock-up period.
The final EUR2.0 million deferred cash consideration will be payable a year after completion, subject to unspecified conditions being met.
The deal is set to close in early June.
In 2016, Silcotec generated EUR3.1 million in earnings before interest and taxes - or operating profit - on revenue of EUR17.8 million. For comparison, Volex generated USD9.1 million in underlying operating profit on revenue of USD319.6 million for the year ended April 2, 2017.
In part to fund the deal, Volex proposes to raise GBP36.0 million through the issue of 48.0 million shares at a price of 75.0 pence each. Shares in Volex were 3.1% higher at 76.82p on Wednesday.
"This acquisition is an important step in expanding our cable assembly activities in Europe," Volex Executive Chairman Nat Rothschild said. "Silcotec is a well run business, providing high quality cables, assemblies and box-builds for the medical industry. In addition, following the fund raising, Volex will have a well capitalised balance sheet to allow for further investment in our business which will benefit our customers, employees and shareholders."