22 January 2025
LPA Group
plc
("LPA", the
"Company" or the
"Group")
Acquisition of Power
Business
LPA Group plc, the innovation-led engineering specialist in
electronic and electro-mechanical components and systems, is pleased
to announce
that an agreement has been signed to acquire the UK trade and assets of a power
supply provider (the "Acquisition").
LPA has reached
agreement with Eaton Electrical Products Limited
to acquire Eaton's Powertron business. The Acquisition includes
the UK trading
division and assets, including its small manufacturing capability in Cambridgeshire. The
Acquisition is complementary to a number of power supply products the Company currently
manufactures
for the
rail industry. Some of
the components being outsourced by
the business
will in future be manufactured by LPA in Yorkshire
and given LPA's existing extensive sales network, the Group
anticipates that it will increase these sales volumes over
time.
The Acquisition, by way of an asset
purchase agreement, results in LPA acquiring fixed assets, current
assets and liabilities, the employment of approximately 20 members
of staff, and the business including worldwide rights to brands and
product designs. The consideration for the Acquisition
is in the form of LPA,
taking on the
obligation to
settle lease dilapidation obligations
expected to be due
in 2026 estimated at £200,000, taking on liability for any customer
product
warranty
claims capped
at in total £150,000, and a cash payment to the seller currently estimated
at c.£17,000 calculated with reference to net working capital as at
31 January 2025. A fair
value exercise will be carried
out following completion of the Acquisition, and it is expected that
this will show that the
assets have
been acquired at a
discount
to their
fair value.
The
Company
anticipates the Acquisition will be broadly neutral to FY25
profit, and that it will make a small and
growing contribution to Group
profits over time with the expected
increase in sales volumes. Importantly it will
align with
the Company's strategy
of transitioning
its factories to manufacture more
standardised products with decreasing reliance on New Project delivery sales.
The
business the
subject of
the Acquisition achieved revenues for the
year ended 31 December 2023 of £2.1 million, a loss before tax of £77,000, and net assets
being acquired are estimated
currently at approximately £565,000 (calculation excludes any accrual for lease
dilapidation obligations) (all unaudited).
It is
expected that completion of the Acquisition
will occur in Q1
calendar 2025, subject
to TUPE consultations, the transfer of
the buildings
lease and finalisation of net working capital.
Robert Horvath, Chairman said: "The addition of more
stable month
on month product is a key part of our ongoing strategy to keep
our manufacturing units productive and
this Acquisition, importantly will support our delivery against our strategy.
This Acquisition, and the
acquisition of the Red
Box business
announced last year, while both small, are going to make a
significant difference to monthly
sales volumes that
we can build upon, supported by
our international distribution network.
We are also seeing good progress
in increasing the sales in the connector side of our aviation business as well
as our Channel distribution
business."
For
further information, please contact:
