REG - SDI Group PLC - Acquisition of Collins Walker

SDIAnnouncement

04/04/2025 07:00

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RNS Number : 6176D  SDI Group PLC  04 April 2025

SDI Group plc

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

Acquisition of Collins Walker

4 April 2025 - SDI Group plc (https://sdigroup.com/) , the buy and build
group, focused on companies which design and manufacture specialist lab
equipment, industrial & scientific sensors and industrial & scientific
products, announces the bolt-in acquisition of Collins Walker Ltd ("Collins
Walker"), a designer and manufacturer of electric boilers, offering bespoke
steam and hot water systems for industrial applications, for a net
consideration of c.£1.85m.

Highlights

·      Profitable business in the regulatory-driven, high-growth,
industrial electric boiler market

·      Blue chip customer base and strong international revenues

·      Collins Walker will join SDI's Industrial & Scientific
Products division

·      Bolt-in acquisition for portfolio company, Applied Thermal
Control - merging back-office functions and increasing manufacturing capacity
for Collins Walker

·      Provides intra-Group value-add manufacturing opportunities

·      Continuation of SDI's acquisition strategy

·      Acquisition is expected to be earnings enhancing(1) in the first
full year post-acquisition, with potential for additional integration benefits
including increased growth rate

The acquisition of Collins Walker provides SDI with strategic entry into the
highly regulatory-driven electric boiler sector, an expanding market boosted
by net zero regulations. The addressable market for Collins Walker is
currently estimated at $255m. The industrial boiler market, valued at $11bn in
2024, is witnessing a significant shift towards electric solutions.

Collins Walker provides industrial scale electric boilers, for steam and hot
water applications, utilising electrode and immersion element technologies.
Collins Walker's route to market is within energy-intensive, high-growth
industrial applications, encompassing steam production and hot water for
sectors such as healthcare, industrial processing, distillation, brewing,
commercial buildings and distributed heating applications.

The integration of Collins Walker into Applied Thermal Control is
strategically designed to enhance Collins Walker's growth through expanded
manufacturing capacity, strengthened sales capabilities, and improved
operational efficiencies. This synergy is projected to drive increased sales
and margin performance for both entities. Additionally, there are further
Group value-added opportunities with LTE Scientific, which utilises electric
boilers in its autoclave product line.

For the year ended 31 March 2024, Collins Walker delivered revenue of £0.94m
and a reported EBIT of £0.31m (all unaudited).

Stephen Brown, Chief Executive Officer of SDI Group, said:

"Collins Walker represents a strategic acquisition for SDI, aligning with our
core investment criteria through its established position within a
regulatory-driven, high-growth sector with international reach. Its lean,
profitable operations offer a compelling opportunity for expansion, leveraging
existing Group manufacturing capacity to capitalise on the growing Net Zero
and energy efficiency markets.

The integration of Collins Walker with Applied Thermal Control's manufacturing
and operational capabilities, will reduce current capacity constraints and
provide a platform for accelerated market penetration."

About Collins Walker

Collins Walker was established in 1972 with the intention of establishing
itself as a worldwide leader in the electric boiler market offering bespoke
steam and hot water solutions to customers around the world. Key applications
range from distillation of alcoholic spirits and brewing, through to
healthcare, pharmaceuticals and industrial processing. Collins Walker has a
global, blue chip customer base and operates from a site in Bedford. Chris
Goddard is the sole shareholder of the business, prior to the acquisition.
Chris will remain with the business.

Consideration for the Acquisition

Net consideration is £1.85m, up to a maximum of £1.95m, excluding cash
acquired. Total consideration, including acquired cash, is expected to be
£2.12m, up to a maximum of £2.22m and consists of:

·      £1.75m initially paid in cash, with a further £0.1m to be paid
on the finalisation of the completion accounts;

 

·      Acquired cash is £0.27m, £0.22m of which will be paid for in
cash on completion and a further £45,000 will be paid for on finalisation of
the completion accounts; and

 

·      A balancing cash payment may be made shortly after finalisation
of the completion accounts and depends on the final net assets of Collins
Walker. This is not expected to be significant and is subject to a cap of
£0.1m

The cash consideration will be funded from the Group's revolving credit
facility with HSBC UK Bank. As at 28 February 2025, the Group had cash of
approximately £1.6m (unaudited), bank debt of £14.7m (unaudited) and £10.3m
of undrawn bank facility (excluding the accordion option). The Group has a
further £0.5m of deferred consideration payable relating to a previous
acquisition.

 

(1) Analysts from SDI's broker Cavendish Capital Markets Limited, and from
Progressive Equity Research regularly provide research on the Company,
accessible from SDI's website, and the Group considers the average of their
forecasts to represent market expectations which for FY26 were, prior to
announcement of this acquisition, Sales of £72.4m and Adjusted Profit Before
Tax of £9.35m. The Collins Walker acquisition will make a c.1 month
contribution to SDI's FY25 ending 30 April 2025 and therefore the Company
makes no change to its FY25 market guidance.

 

 Enquiries:
 SDI Group plc                                        +44 (0)1223 727144

 Stephen Brown, Chief Executive Officer               www.sdigroup.com (http://www.sdigroup.com/)

 Amitabh Sharma, Chief Financial Officer

 Cavendish Capital Markets Ltd (NOMAD & broker)       +44 (0)20 7220 0500

 Ed Frisby / Seamus Fricker - Corporate Finance

 Andrew Burdis / Sunila de Silva - ECM

 Vigo Consulting (Financial Communications)           +44 (0)20 7390 0230

 Tim McCall / Rozi Morris / Fiona Hetherington        SDIGroup@vigoconsulting.com (mailto:SDIGroup@vigoconsulting.com)

 

About SDI Group plc

SDI Group plc is a group of small to medium size companies with specialist
industrial and scientific products in growth sector niches which help solve
customers' key challenges. It specialises in the acquisition and development
of companies that design and manufacture specialist products for use in lab
equipment, industrial & scientific sensors and industrial & scientific
products.

Its portfolio of businesses supplies the life sciences, healthcare, plastics
and packaging, manufacturing, precision optics and measurement instrumentation
markets.

SDI aims to continue its growth through driving the organic growth of its
portfolio companies and by the acquisition of complementary technology
businesses with established reputations in global markets.

For more information, please see: www.SDIGroup.com (http://www.sdigroup.com/)

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.

 

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