Renold plc
("Renold", "the Company" or "the
Group")
Proposed acquisition of Aventics TC
("the Acquisition")
Renold, a leading international
supplier of industrial chains and related power transmission
products, is pleased to announce that it has signed a conditional
sale and purchase agreement to acquire the business and trading
assets of Aventics Tooth Chain ("Aventics TC"), an operating
division of Aventics Gmbh based in Germany, for up to €6.3 million
(£4.5 million) in cash.
The consideration (on a cash and
debt free basis) will be satisfied by an initial payment of €4.8
million at completion followed by further expected payments of up
to €1.5 million over the two year period following completion,
contingent on achieving certain sales targets. All payments will be
satisfied from the Group's existing banking facilities. Completion
of the Acquisition is expected to occur after the statutory 'TUPE'
consultation period with the employees in Germany and after certain
carve out activities have been completed to separate the business
from Aventics.
As a division of Aventics Gmbh,
Aventics TC does not prepare separate audited accounts. Based on
financial information obtained by Renold during the due diligence
process, third-party sales in the year to 31 December 2014 were
€7.5 million (£5.3 million). In addition, approximately €1.5
million (£1.0 million) of sales were delivered indirectly via other
Aventics group companies and plans are in place to transition this
indirect business to Renold as part of the post closing process. On
a proforma basis, Aventics TC made an operating profit before
exceptional items of €1.1 million (£0.8 million) in the year ended
31 December 2014. Gross assets at that date were €1.7 million (£1.2
million).
Renold anticipates that the
Acquisition will be broadly neutral for adjusted earnings in the
current financial year, as a result of the business separation
costs to be incurred, but should be earnings enhancing
thereafter. The Acquisition constitutes a
Class 2 transaction for the purposes of the UK Financial
Authority's Listing Rules and, as such, does not require Renold
shareholders' approval.
Aventics TC
Aventics TC is the market leader in
the manufacture of inverted tooth chain for industrial
applications. Tooth chain is a specialist product not currently
manufactured by Renold and is typically seen in applications such
as bottling plants and other manufacturing facilities and
equipment. The business employs 65 people and operates from a
self-contained rented facility in Gronau, Lower Saxony with its own
dedicated manufacturing, engineering and sales teams. Two thirds of
Aventics TC sales are currently made in Germany with the balance of
sales being made in a wide range of international territories
including other western European countries, the USA and China. The
business operates as a niche division of Aventics Gmbh which
specialises in pneumatics equipment and shares certain sales and
back office processes with the Aventics Group as a
whole.
Benefits of the
acquisition
Through the Acquisition of Aventics
TC, Renold will gain access to a high value-added product not
currently part of the Renold offering. Renold expects to expand
sales through the existing Renold global sales presence and network
which will allow access to a much wider geographical market than
currently. In addition, as the factory is close to Renold's plant
in Einbeck, Germany, the business will be able to share expertise
and some infrastructure services within the more substantial Renold
Group.
Robert Purcell, Chief Executive of
Renold, said:
"The purchase of Aventics TC is an
excellent fit with Phase 3 of our STEP 2020 Strategic Plan (the
'Acquisitions' Phase). Aventics TC manufactures a specialist, high
quality product which will expand our existing product offering
whilst Renold's international footprint will, over time, give the
Tooth Chain business access to new customers and
geographies."
17 November 2015
ENQUIRIES:
Renold plc
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0161 498 4500
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Robert Purcell, Chief
Executive
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Brian Tenner, Finance
Director
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Arden Partners
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020 7614 5917
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Chris Hardie
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Instinctif Partners
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020 7457 2020
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Mark Garraway
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Helen Tarbet
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NOTES FOR EDITORS
Renold is a global leader in the
manufacture of industrial chains and also manufactures a range of
torque transmission products which are sold throughout the world to
a broad range of original equipment manufacturers and distributors.
The Company has a well deserved reputation for quality that is
recognised worldwide. Its products are used in a wide variety of
industries including manufacturing, transportation, energy, steel
and mining.
Further information about Renold can
be found on the website at: www.renold.com