REG - Renold PLC - Acquisition of Davidson Chain PTY

RenoldAnnouncement

01/09/2023 07:00

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RNS Number : 0958L  Renold PLC  01 September 2023

1 September 2023

Renold plc

("Renold", the "Company" or the "Group")

Acquisition of Davidson Chain PTY

 

Renold, a leading international supplier of industrial chains and related
power transmission products, is pleased to announce that it has acquired the
trading assets of Davidson Chain PTY ("Davidson") for a total cash
consideration of AU$6 million (the "Acquisition").

 

Highlights

 

·      Established in Melbourne, Australia, in 1991, Davidson is a
family owned manufacturer and distributor of high-quality conveyor chain
("CVC").

·      The Acquisition increases the Group's access to the Australian
CVC market, building on Renold's existing strong market position.

·      Opportunities exist for significant manufacturing synergies
between Davidson and Renold's current Australian operations.

·      The Davidson management team have transferred to the Group,
bringing with them a wealth of industry experience and market knowledge, and
will continue to lead the Davidson business, joining Renold's Australasian
management team.

·      The Acquisition is expected to immediately enhance Group earnings
per share, and be accretive to the Group's operating margin.

·      ROIC is expected to be in line with management's targets, and
above Renold's weighted average cost of capital in the first year of
ownership.

 

The Acquisition and financial considerations

 

Davidson was acquired on a cash free, debt free basis, for a total cash
consideration of AU$6 million.

 

The Acquisition consideration represents a multiple of approximately 5.9x
Davidson's June LTM EBITDA. There are a number of identified synergy benefits,
the effect of which is expected to reduce the multiple to below 5.0x in the
short term.

 

The Acquisition is funded from the Group's existing borrowing facilities. As
at 31 March 2023, the Group's net debt to EBITDA multiple was 0.8x and
following completion of the Acquisition remains broadly similar. The Group
remains well placed, with sufficient borrowing headroom, to execute on further
bolt-on acquisition opportunities from an identified pipeline of targets.

 

Davidson delivered revenue of AU$4.2 million for the 12 months to June 2023,
generating an EBITDA of AU$ 1.1 million.

 

Commenting on the Acquisition, Robert Purcell, Group Chief Executive of Renold
plc, said:

"The Davidson acquisition demonstrates further strategic momentum,
supplementing organic growth through high quality bolt-on acquisitions which
can expand our geographic presence, grow our product offering and strengthen
our market position in key end markets.

"We are delighted that Davidson has joined the Renold Group, and believe that
not only have we acquired an excellent business, but also retained the
services of a very experienced team. The Davidson business is very much
aligned with Renold, including an excellent long-established track record of
manufacturing and supplying high quality chain products with an
entrepreneurial culture that will fit well with our own.

"We welcome the Davidson team to Renold."

ENQUIRIES:

 

 Renold plc                           IFC Advisory Limited
 Robert Purcell, Chief Executive      Tim Metcalfe
 Jim Haughey, Group Finance Director  Graham Herring
                                      renold@investor-focus.co.uk (mailto:renold@investor-focus.co.uk)

 0161 498 4500                        020 3934 6630

 

 

 Nominated Adviser and Joint Broker  Joint Broker
 Peel Hunt LLP                       FinnCap Limited
 Mike Bell                           Ed Frisby (Corporate Finance)
 Ed Allsopp                          Andrew Burdis / Harriet Ward (ECM)

 020 7418 8900                       020 7220 0500

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 (http://www.renold.com)

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