Spectra Systems buys Cartor to boost polymer substrate supply

(Alliance News) - Spectra Systems Corp on Monday said it will buy Cartor Holdings Ltd, a security printing company, to boost its polymer substrate supply.

The Providence, Rhode Island-based authentication technology provider said the GBP10.5 million acquisition will increase margins on polymer substrates by bringing profit margin within the enlarged company.

Further, it will increase combined earnings via replacing current supplies to Cartor with Spectra's optical materials, increase product development capabilities and increase visibility for Spectra's two facilities in England's Wolverhampton and France's Meauce.

Spectra said it will pay GBP5.5 million on completion of the acquisition, with an additional up to GBP3.0 million subject to customary net asset, net cash and third-party debt adjustments. Further, GBP2.0 million may become payable by Spectra through the issue of further shares, "in the event that Spectra has qualified its Fusion polymer substrate for tender submissions with a central bank customer."

"Spectra has been working with Cartor for two years to achieve high quality conventional and machine-readable, ready for printing polymer substrates which include conductive layers, opacity layers and bespoke window designs as required by central banks. Spectra has enhanced its competitive position in the market by further integrating the production supply chain of Fusion," Spectra said.

Cartor Managing Director Andrew Brigham said: "The acquisition comes at a time when Cartor is poised for growth and under [Chief Executive Officer] Nabil [Lawandy]'s leadership we hope to accelerate this and unlock new opportunities. The Cartor group expects to leverage Spectra's deep technical expertise and Cartor's operational 'know-how' to deliver game changing solutions to its current and future customers."

In the financial year 2023 ended September 30, Cartor had a pretax profit of GBP435,600, about halved from GBP1.0 million a year prior. Revenue grew 1.0% to GBP16.2 million from GBP16.0 million, while earnings before interest, tax, depreciation and amortisation fell 16% to GBP2.5 million from GBP3.0 million.

Spectra Systems shares rose 10% to 195.00 pence each on Monday morning in London.

By Tom Budszus, Alliance News slot editor

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