REG - SDI Group PLC - Acquisition of Severn Thermal Solutions

SDIAnnouncement

06/06/2025 07:00

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RNS Number : 7094L  SDI Group PLC  06 June 2025

SDI Group plc

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

 

Acquisition of Severn Thermal Solutions

 

6 June 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,
is pleased to announce the acquisition of Severn Thermal Solutions Ltd
("Severn") for a net consideration of £4.75m. Severn is a designer and
manufacturer of high temperature furnace systems and environmental chambers
for advanced material processing and testing.

 

Highlights

·      Profitable business in the material testing and processing
industry providing the Group with expansion into the controlled environment
market

·      Scientific niche in a growing market, blue-chip customer base and
strong international revenues, delivering on the Group's stated acquisition
strategy

·      Severn will join the Group's Lab Equipment segment with
intra-group cross-selling opportunities

·      The acquisition is expected to be immediately earnings
enhancing(1)

 

Severn designs and manufactures furnaces and environmental chambers for a wide
range of applications within industry and research, offering advanced material
testing and processing for niche scientific sectors including nuclear,
aerospace and semiconductors. Its systems are capable of achieving
temperatures of over 3000°C or close to absolute zero. Severn offers the
Group expansion into the controlled environment market and a global, blue-chip
customer base.

 

For the year ended 30 September 2024, Severn delivered revenue of £2.42m,
adjusted EBIT of £0.88m (adjusted to reflect Severn's cost base as part of
the enlarged Group) and a reported EBIT of £1.06m (all unaudited).

 

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

"Severn is a growing, profitable business, aligning with our key investment
criteria of targeting scientific and industrial niche markets with global
reach. Severn benefits from a strong, experienced management team who will
remain in place, maintaining its sustainable sales pipeline, supported by
significant international exposure.

 

"We are excited by the prospects for this acquisition, both as a standalone
entity and in the cross-sell opportunities to other businesses across the
Group. We continue to pursue our acquisitive growth strategy alongside our
organic growth programme."

 

 

About Severn Thermal Solutions

Established in 2006, Severn designs, manufactures and sells high and low
temperature systems (furnaces, environmental chambers and ovens), which are
used for materials testing and materials processing applications, in multiple
sectors, including nuclear, aerospace, power generation, automotive,
semiconductors, microelectronics and research. Severn provides both standard
and bespoke products across these sectors, and its products are now sold in
over 25 countries worldwide. Severn employs 11 people and is based in a 4,500
sq. ft. site in Dursley, UK. The shareholders of the business, prior to this
acquisition, were Nigel Ryder and Tracy Ryder (the majority shareholders),
Jason Grout and Peter Collett. All will remain with the business in a
full-time capacity.

 

Consideration for the Acquisition

Net total consideration is £4.75m, excluding the £3.57m of cash acquired.
Total consideration comprises the following:

 

·      Cash consideration payable immediately on completion of £7.84m;
and

·    Deferred cash consideration of £0.48m which is expected to be paid
to the sellers shortly after completion.

·      Gross and net cash acquired of £3.57m.

 

The cash consideration payable on completion will be funded from the Group's
revolving credit facility with HSBC UK Bank. As at 30 April 2025, the Group
had cash of approximately £1.3m (unaudited), bank debt of £15.1m (unaudited)
and £9.9m of undrawn bank facility (excluding the accordion option). The
Group has a further £0.6m of deferred consideration payable relating to
previous acquisitions.

 

(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 £73.2m and Adjusted Profit Before
Tax of £9.5m.

 

 

 

 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.

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

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