IMI Regulatory News (IMI)

8 November 2022

Proposed acquisition of Heatmiser for £110m

Heatmiser, a leading UK smart thermostatic control manufacturer, brings significant growth opportunities in the UK and in Europe

IMI plc ("IMI" or the "Group") announces the proposed acquisition of Heatmiser UK Ltd ("Heatmiser") for an enterprise value of £110m, with up to a further £8m based on Heatmiser's future financial performance. Heatmiser will become part of IMI Hydronic Engineering ("IMI Hydronic").

The proposed acquisition of Heatmiser is fully aligned with IMI's strategy and purpose of [Breakthrough Engineering for a better world] and represents an opportunity to accelerate our growth in smart buildings. Adjacent to IMI Hydronic's existing HVAC product offerings, Heatmiser will provide an attractive entry point into connected residential thermostatic control, a fast-growing market where Heatmiser is already a UK leader. There are also significant opportunities to leverage IMI Hydronic's strong brand and market presence to scale Heatmiser's offering across Europe, as well as leverage Heatmiser's proven connected technology capabilities across existing and new IMI products.

The demand for smart temperature controls is growing rapidly and is expected to accelerate further, with more than 200 million buildings in Europe requiring renovation to upgrade their heating and cooling systems over the next 30 years, to comply with energy efficiency and environmental legislation.

In the financial year to December 2022, Heatmiser is expected to generate revenues of c.£22.5m. The headline enterprise value represents c.12x 2022 estimated adjusted EBITDA. Closing is expected before year end, subject to normal filings.

Heatmiser overview

Heatmiser is one of the UK's leading smart thermostatic control manufacturers for radiant systems, enabling homeowners to accurately control heating and cooling in each room remotely. The company's success is based on its portfolio of high-quality products, strong customer relationships, digitalised commercial model and great technical support for their customers.

Heatmiser was founded by Gordon Kay in 1968 in Blackburn, UK, to develop thermostatic control products for residential buildings. Since then, the company has leveraged technological advancements to become a leading manufacturer of smart thermostats for radiant underfloor systems in the UK, with strong recognition by both installers and end-users. Heatmiser is currently managed by Martyn and Sarah Kay, who will remain in the business and continue to manage it as part of IMI Hydronic.

Transaction highlights

§ Extends IMI Hydronic's energy saving product portfolio adding a range of adjacent smart thermostatic control products for room temperature control.

§ Allows IMI to capitalise on the growing demand for smart temperature controls, which is expected to accelerate further in the coming years to enable more energy efficient, smarter, and greener buildings.

§ Significant commercial synergy potential between Heatmiser and IMI Hydronic, accelerating Heatmiser's growth into mainland Europe by leveraging IMI Hydronic's strong brands, hydronic expertise, reputation with installers and existing commercial infrastructure.

§ Expected to be growth, margin and earnings accretive to IMI, as well as deliver returns above cost of capital by year three, fully aligning with the Group's M&A criteria.

Commenting on the acquisition, Roy Twite, Chief Executive of IMI, said:

"I am really pleased to announce the acquisition of Heatmiser, which is fully aligned to IMI's strategy of delivering significant shareholder value by solving industry problems and putting customers at the heart of what we do. This is an important, strategic entry point to the rapidly growing connected controls market, that will accelerate our organic growth across IMI Hydronic. There has never been more urgency to deliver energy efficiency and comfort in buildings, and Heatmiser is a leader in this space. I want to personally thank the Kay family for their commitment to the transaction and welcome the entire Heatmiser team into IMI."

Phil Clifton, Divisional Managing Director of IMI Hydronic Engineering, commented:

"I am very excited about the possibilities that Heatmiser provides for our division and its potential to provide significant energy efficiencies for our customers. Helping our customers save energy is key to our Better World purpose. The business has a fantastic range of smart products, a leading position in the UK and a highly innovative and recognised proposition for its customers. We are all looking forward to working with Martyn & Sarah Kay and the entire Heatmiser team to grow the business jointly in the coming years."

Martyn Kay and Sarah Kay, Heatmiser UK Ltd Directors, added:

"We feel very proud of the business we have created at Heatmiser and we want to say a big thank you to our team for helping us achieve a market leading position. 

By listening to our customers and reacting to market change, we have become one of the UK's leading HVAC control brands and we are excited about joining the IMI family and the opportunities this will bring. We are particularly excited about the growth potential of the business in new territories and our joint vision of creating a better more energy efficient world."

Enquiries

Notes

Heatmiser UK Ltd

Heatmiser is located in Blackburn, in the heart of Lancashire. Established in 1968, Heatmiser has become one of the UK's leading smart thermostat manufacturers. Heatmiser has established partnerships with heating installers and heating equipment manufactures across the UK. The company delivers over 90% of its products in the UK as well as in Europe, Australia, New Zealand, South Africa and China, where the company operates a subsidiary in Beijing. Further information is available at www.heatmiser.com.

IMI plc

IMI plc, the specialist engineering company, designs, manufactures and services highly engineered products that control the precise movement of fluids. Its innovative technologies, built around valves and actuators, enable vital processes to operate safely, sustainably, cleanly, efficiently and cost effectively. IMI employs around 10,000 people, has manufacturing facilities in 19 countries and operates a global service network. The Company is listed on the London Stock Exchange and is a constituent of the FTSE4Good Index. Further information is available at www.imiplc.com.

IMI plc is registered in England No. 714275. Its legal entity identifier ('LEI') number is 2138002W9Q21PF751R30.