Porvair Regulatory News (PRV)

9 Jul 2008 07:00



For immediate release 9 July 2008

Porvair plc 

("Porvair" or the "Group")

Acquisition of Seal Analytical Ltd

Porvair plc today announces the acquisition of Seal Analytical Ltd ("Seal"), a leading manufacturer of water quality analysis equipment for environmental and industrial laboratories. The acquisition allows Porvair to build on its position in water quality markets and brings immediate opportunities for cost savings and revenue growth.

Seal is being acquired from its shareholders who include The South East Growth Fund and Tim Brittain, Seal's Managing Director.

The acquisition values Seal's ordinary and preference share capital at up to £3.8 million (net of option receipts), to be settled by up to £2.3 million of cash and up to £1.5 million of shares in Porvair (the "Consideration Shares"). Porvair will also assume £2.2 million of Seal's existing bank borrowings and £0.3 million of finance leases for a total consideration of a maximum of £6.3 million pending net asset adjustments of up to £0.5 million. Seal had gross assets of £3.9 million at 30 June 2007, including goodwill of £1.2 million.

For the financial year ended 30 June 2008, Seal is expected to report revenues of approximately £7.6 million (2007: £6.0 million) and PBT of approximately £0.5 million (2007: loss of £0.7 million).

Seal's main products, analysis instruments and related consumables are highly regarded. Its seawater testing systems are the industry standard and it has grown its US business to be the market leader in the past four years. Seal is based in the UK and has larger operations in the USA and Germany. Around 15% of sales revenues are to UK customers. Key management will remain with the business following the acquisition. 

The global water quality equipment market is growing strongly. Water testing is generally mandatory and must be done using approved methods to which Seal's products conform. Independent estimates predict market growth of 11% per annum in the period 2008 - 2011 as water quality standards tighten across the world and laboratories automate their processes to achieve more consistent results. Seal has a good position in the well defined 'wet chemistry' segment of the market, which is concerned with the detection of inorganic contaminants in water.

Porvair already supplies this market with laboratory consumables, porous plastics and water filters and these existing activities will benefit from the strength of Seal's customer relationships. The board has also identified cost and operational benefits in the transaction and plans to expand Seal's product offering and geographic reach by using the wider scope of the Group. 

The acquisition is expected to be earnings enhancing in the first full year of ownership. 

Application will be made to the UK Listing Authority and the London Stock Exchange for the Consideration Shares to be admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange.

Commenting on the transaction, Ben Stocks, Chief executive of Porvair said:

"For some time we have been looking at ways of expanding our presence in water quality, a field closely related to the filtration we already do. Water quality concerns are growing around the world, driven by population growth, water scarcity and pollution. In response, governments are expanding water quality standards, mandating testing by approved methods. The combined Porvair and Seal businesses are ideally placed to serve this growing requirement for domestic and commercial clean water analysis. We are excited by the business opportunities that this acquisition presents and we are pleased to welcome Seal's management and staff to the Porvair group."

For further information please contact: