TIDMIMI
RNS Number : 2970Z
IMI PLC
14 December 2017
14 December 2017
IMI plc ("IMI" or "the Group")
IMI agrees to acquire Bimba Manufacturing Company ("Bimba") for
US$198m
IMI is pleased to announce that it has agreed to acquire Bimba,
a market leading manufacturer of pneumatic, hydraulic and electric
motion solutions with an extensive distributor network principally
servicing the North American Industrial Automation market. Bimba
will become an integral part of IMI Precision Engineering and the
acquisition represents a significant strategic step for the
division.
Transaction highlights
-- The acquisition is fully aligned with the Group's strategy
and is an excellent fit with IMI Precision Engineering.
-- Bimba will nearly double the size of IMI Precision
Engineering's US Industrial Automation business providing market
leading distribution and complementary products, with minimal
overlap.
-- Plan to progressively move Bimba margins closer to those of IMI Precision Engineering.
-- The transaction will be earnings enhancing in the first full
year of ownership with return on capital exceeding IMI's cost of
capital within the first three years.
The transaction is fully aligned with IMI's strategy and fulfils
its stated objective of increasing its US revenues while extending
IMI Precision Engineering's presence in its core Industrial
Automation segment. In particular, the acquisition provides the
platform to accelerate IMI Precision Engineering's North American
growth objectives by leveraging both Bimba's strong brand and its
market leading US distributor network. The combination will also
materially improve Bimba's profitability with margins expected to
progressively move closer to those of IMI Precision Engineering as
it adopts IMI's operational excellence programme.
The consideration for the transaction will be US$198 million
(GBP148 million(1) ) payable in cash on completion from existing
bank facilities. In addition, IMI has set aside US$2.5 million for
the purpose of staff retention.
Completion is conditional on merger clearance and the approval
by Bimba's employee stock ownership plan ("ESOP"), both of which
are expected to take place in early 2018. The acquisition is
expected to be earnings enhancing in the first full year of
ownership and return on capital is expected to exceed IMI's cost of
capital within three years.
Bimba overview
Founded in 1957, Bimba manufactures an advanced range of
actuators and associated products primarily for the Industrial
Automation market. It has a blue-chip client base, extensive
distributor relationships and a significant installed base. The
company's head office is located in Chicago, Illinois and it
operates from nine locations, seven in the US, one in Mexico and a
sales office in the Netherlands. The vast majority of its revenues
are in the US and it has around 500 permanent employees. Patrick
Ormsby, the long-term President of Bimba, and all of his executive
and management will remain with Bimba after completion.
For the year ending December 2016 Bimba generated revenues of
US$109 million and adjusted EBITDA of US$13.3 million, which
includes a pro-forma adjustment for an assumed US$1.5 million
increase in plant and operational improvement resource. In 2017,
the Bimba business is expected to grow in line with IMI Precision
Engineering's North American business and to produce unaudited
external revenues of c.US$120 million and adjusted EBITDA of
c.US$16 million with the same pro-forma adjustment of US$1.5m
included for additional operational resources.
Compelling strategic combination
The acquisition adds breadth and depth to both companies'
existing product offerings by combining Bimba's complementary
cylinder products with IMI Precision Engineering's valve and air
preparation portfolio, with minimal overlap. The integration team's
first priority will be to present a unified approach to the market
while building a platform to accelerate the commercial and
distribution opportunities which the combination creates.
In addition to commercial benefits, the acquisition will
generate significant opportunities as IMI's industry-recognised
operational improvement processes are progressively rolled out
across Bimba's manufacturing operations. On completion, an initial
twelve-month programme focused on readying the business for
accelerated growth will be implemented and will be followed by a
three-year programme of synergy delivery and performance
improvements. Hard synergies in the order of 7% of revenues are
considered achievable.
Commenting on the acquisition Mark Selway, Chief Executive of
IMI said:
"Bimba is a terrific company which is perfectly aligned with
IMI's strategic objectives and we are delighted to welcome all of
its employees to the Group. Bimba will significantly enhance IMI
Precision Engineering's current position in the US Industrial
Automation market. The enlarged product portfolio will increase our
competitiveness and Bimba's extensive distributor network will
materially improve IMI Precision Engineering's US market access. We
are really excited about the future and look forward to working
with the Bimba team."
Patrick Ormsby, Chief Executive of Bimba added:
"This is an exciting and transformational next step for Bimba as
it becomes an important part of an internationally recognised
global engineering business. We now have the opportunity to grow
our business beyond the US, offer our customers enhanced products
and services and compete more effectively. The management team will
remain with the business and we are all very excited by the
significant opportunities that this deal will create."
Trading update and preliminary results announcement
Expectations in relation to the Group's 2017 full year results,
as outlined at the time of the November 2017 Interim Management
Statement, remain unchanged. As previously advised, the Group's
preliminary results announcement for the full year ended 31
December 2017 will be issued on 2 March 2018.
A conference call for analysts and investors will be held at
08:30 GMT to discuss this statement. To access the call, please
dial: +44 (0)1452 555 566 or 0800 694 0257, conference call id:
9474487. A presentation to accompany this announcement can be found
at www.imiplc.com/investors/presentations. This announcement
contains inside information.
Enquiries to:
John Dean IMI Tel: +44 (0)121 717 3712
Suzanne Bartch / Gayden Metcalfe Teneo Blue Rubicon Tel: +44 (0)203 757 9239
Notes to editors
IMI plc
IMI plc, the specialist engineering company, designs,
manufactures and services highly engineered products that control
the precise movement of fluids. IMI has manufacturing facilities in
more than 20 countries and operates a global service network. The
Company is listed on the London Stock Exchange. Further information
is available at www.imiplc.com. IMI plc is registered in England
No. 714275. Its legal entity identifier ('LEI') number is
2138002W9Q21PF751R30.
(1) Exchange rate of GBP1 = US$1.34
This information is provided by RNS
The company news service from the London Stock Exchange
END
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