TIDMSOLI
RNS Number : 9344Q
Solid State PLC
03 March 2021
Solid State plc
("Solid State", the "Group" or the "Company")
Acquisition of Electro-mechanical Component Manufacturer and
Supplier
& Investor Presentation
Solid State plc (AIM: SOLI), the AIM listed manufacturer of
computing, power and communications products, and value added
supplier of electronic and opto-electronic components , is pleased
to announce the acquisition of Willow Technologies Limited and its
subsidiaries ("Willow Technologies") (the "Acquisition") for an
initial consideration of GBP10.0m, which, when adjusted for the
cash on the balance sheet, results in an effective net initial
consideration of approximately GBP5.5m.
Highlights of the Acquisition include:
-- Willow Technologies with American Electronic Components Inc.
(AEC) (its US based subsidiary) is a manufacturer and value added
distributor of electro-mechanical products used in strategic,
structural, growth markets.
-- Willow Technologies with AEC brings a range of own brand
electro-mechanical relays and contactors under the Durakool â brand
and a range of glass to metal seals under the Hermaseal â
brand.
-- Willow Technologies' range of own brand products
significantly enhances the Group's Value Added Supplies division's
offering for electric vehicles, EV charging, green tech, medical
and military markets.
-- The Acquisition complements the Group's opto-electronic and
electronic component supplies capability; significantly enhancing
the breadth of the Group's offering, adding further scale,
strength, and depth in electronic component supplies.
-- The acquisition of Willow Technologies supports the Group's
strategic objective of increasing geographic reach with over 70% of
revenue derived outside of the UK.
-- AEC provides an established and respected platform within the
USA giving critical mass to the Group's existing American
business.
-- The Acquisition supports the strategic objective to increase
the product offering to the Group's existing customer base.
-- Willow Technologies operates at higher gross margin than the
Group's existing component assembly and Value Added Supplies
division.
-- Combining Willow Technologies and Solid State plc's
capabilities differentiates the enlarged customer offering.
-- The Acquisition is expected to be earnings enhancing in the first full year.
Acquisition consideration:
The Company has acquired the entire share capital of Willow
Technologies for an initial cash consideration of GBP10.0m, which,
on a cash free debt free basis, results in an initial net
consideration of approximately GBP5.5m. The initial consideration
is subject to a completion accounts pound for pound adjustment in
the event of any variance to the expected net assets at completion
, with settlement being made out of the Group's existing cash
resources and banking facilities.
In addition to the initial consideration there is a 12 month
earn out period. The earn out consideration will be calculated as a
function of the post-tax profit of Willow Technologies for the
period 31 March 2022, subject to a minimum profit threshold of
GBP700,000. The maximum earn out consideration payable is
GBP3.5m.
Information on Willow Technologies Limited and AEC:
Willow Technologies, founded in 1989, is a highly respected
value added distributor of electro-mechanical components operating
within the UK, Germany, Spain and the USA. Willow Technologies'
specialisms are in switching, sensing, resistive devices and
hermetic seal solutions, the company sells a wide portfolio of
electromechanical technologies. Willow is ISO9001: 2015
registered.
American Electronic Components Inc. ("AEC"), founded as Durakool
in 1935 and acquired by Willow Technologies in 2006, is based in
Indiana USA. AEC specialises in the design, manufacture and
distribution of component level, electro-mechanical switching,
sensing and glass to metal seal solutions. The company has over 85
years of applications experience with a well-established and loyal
customer base. AEC is ISO9001: 2008 and ISO14001:2004
Registered.
Financial performance:
For the year ended 31 March 2020, Willow Technologies reported
revenue of GBP10.3m, profit before tax of GBP0.45m and had net
assets of GBP7.0m.
The business experienced a significant downturn in the first
half of the current financial year principally due to the COVID-19
pandemic. In recent months, both orders and billings have seen a
strong recovery. Although revenues to 31 March 2021 are expected to
be down on the prior year, at circa GBP8.75m, management took
appropriate actions to control costs which has meant the business
will continue to be profitable with underlying profit before tax
expected to be circa GBP0.6m.
Benefits of the Acquisition:
The acquisition of Willow and AEC into the Value Added Supplies
division of Solid State meets a significant number of strategic
priorities and offers the opportunity for future growth in multiple
structural markets and geographic territories. Furthermore, the
Acquisition meets the objective of increasing the division's
penetration of the strategically important, EV, EV charging, green
tech and medical markets. The consequent acquisition of the
Durakool â and Hermaseal â established brand names and associated
patents brings further opportunity for growth through product
development and the extension of the brand to potentially cover
other products within the Group. The widening of the product
offering within the Value Added Supplies division will bring
greater resilience to the business, access to a wider customer base
and increase the importance of the division to its existing
customer base.
Whilst the Acquisition falls under the Value Added Supplies
division it is expected that both Willow and AEC will operate as
stand-alone companies throughout the earn out period. Both
companies are however expected to benefit from access to the wider
resources available in the Value Added Supplies business and in
particular from access to the wider customer base. Post-acquisition
a detailed strategic appraisal of non-core manufactured components
will be undertaken to evaluate whether or not they should be
discontinued with an appropriate last time buy process implemented
in order to improve strategic focus and production
efficiencies.
Commenting on the Acquisition, Gary Marsh, Chief Executive of
Solid State, said:
"It is very rare to find a company that so clearly meets the
strategic imperatives that we have set for the Group. The
acquisition of Willow and AEC dovetails nicely into our Value Added
Supplies division, increasing our geographic reach and own brand
products whilst providing a springboard for growth in the USA. I
would like to take this opportunity to welcome the teams at both
Willow and AEC into the Solid State Group of companies."
Commenting on the Acquisition, Mark Del Giudice, Chief Executive
of Willow Technologies, added:
"By joining the Solid State Group, we have become part of a
dynamic organisation which shares our approach to providing niche
products to new and developing growth markets. Our product
portfolios complement one another and we will work together to
ensure growth for both our business partners and our staff. I look
forward to the next chapter of our business development and
becoming part of the Solid State Group's future."
Investor Presentation: 14.00 on Tuesday 9 March 2021
Gary Marsh, Chief Executive Officer, John Macmichael, Managing
Director of Value Added Supplies division, and Peter James, Group
Finance Director, will hold a presentation on Willow Technologies
at 14.00 on Tuesday 9 March 2021. The presentation will be hosted
through the digital platform Investor Meet Company. Investors can
sign up to Investor Meet Company for free and add to meet Solid
State plc via the following link
https://www.investormeetcompany.com/solid-state-plc/register-investor
. Investors who have already registered and added to meet the
Company will automatically be invited.
Questions can be submitted pre-event to
solidstate@walbrookpr.com , or in real time during the presentation
via the "Ask a Question" function.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.
No statement in this announcement is intended to be a profit
forecast or estimate and no statement in this announcement should
be interpreted to mean that earnings per share of the Company for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
For further information please contact:
Solid State plc Via Walbrook
Gary Marsh - Chief Executive
Peter James - Group Finance Director
WH Ireland (Nominated Adviser & Joint
Broker) 0207 220 1666
Mike Coe / Chris Savidge (Corporate
Finance)
Jasper Berry / David Kilbourn (Corporate
Broking / Sales)
finnCap (Joint Broker)
Ed Frisby (Corporate Finance)
Rhys Williams / Tim Redfern (Sales
/ ECM) 020 7220 0500
Walbrook PR (Financial PR) 020 7933 8780
Tom Cooper / Nick Rome / Nicholas
Johnson 0797 122 1972
solidstate@walbrookpr.com
Analyst Research Reports: For further analyst information and
research see the Solid State plc website:
https://solidstateplc.com/research/
Notes to Editors:
Solid State plc (SOLI) is a value added electronics group
supplying commercial, industrial and military markets with durable
components, assemblies and manufactured units for use in specialist
and harsh environments. The Group's mantra is - 'Trusted technology
for demanding applications'. To see an introductory video on the
Group - https://bit.ly/3kzddx7
Operating through two main divisions: Manufacturing (Steatite
& Active Silicon) and Value Added Supplies (Solid State
Supplies, Pacer, Willow Technologies & AEC); the Group
specialises in complex engineering challenges often requiring
design-in support and component sourcing for computing, power,
communications, electronic, electro-mechanical and opto-electronic
products.
Headquartered in Redditch, Solid State employs over 260 staff
across the UK with branch offices in the USA, serving specialist
markets in oil & gas production, transportation, medical,
construction, security, military and field maintenance.
Solid State was established in 1971 and admitted to AIM in June
1996. The Group has grown organically and by acquisition - having
made 12 acquisitions since 2002.
Durakool â and Hermaseal â are registered brands of AEC.
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