(Alliance News) - Bodycote PLC on Monday set out plans for a GBP60 million share buyback, and it talked up its recent Lake City HT acquisition.
Shares in Bodycote were up 4.0% at 620.00 pence each in London on Monday morning, the best FTSE 250 performer.
The Cheshire, England-based supplier of heat treatments and specialist thermal processing services said it will launch the GBP60 million buyback programme in March. More details on the repurchase plan will be revealed in Bodycote's annual results on March 15.
Bodycote said the buyback comes as a result of "lower than anticipated acquisition spend". The company said a deal to acquire Stack Metallurgical Group will not be completed. This is due "to a failure to satisfy all closing conditions to the agreement".
The firm had announced the deal to acquire SMG in October, at the same time it said it was buying Indiana-based specialist technology company Lake City. Those deals would have amounted to USD145 million in total.
On Friday, Bodycote completed the acquisition of Lake City for a USD66.5 million consideration. Following expected tax benefits of USD7.5 million, the company said the net economic price amounted to USD59.0 million.
Bodycote described Lake City as a "leading hot isostatic pressing and vacuum heat treatment business", which supplies to both the orthopaedic implant and civil aerospace market. The company said that the acquisition "will significantly increase Bodycote's customer reach in the medical market".
Lake City's 2023 forecast revenue is USD14 million, 30% ahead of its 2022 revenue, with an operating profit of around USD6 million. The company expects Lake City to "continue to deliver good progress", and said that the acquisition will be accretive to both Bodycote's profit margins and earnings per share in 2024.
Chief Executive Officer Stephen Harris said: "Completion of the acquisition of Lake City HT is an exciting further step in our strategy to grow our specialist technologies businesses and footprint. This acquisition is an excellent fit, enhances our profitability and earnings per share in addition to allowing us to capitalise on the appealing structural growth opportunities in medical and aerospace markets."
By Hugh Cameron, Alliance News reporter
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