REG - Spectris PLC - Divestment of Omega Engineering and £300m buyback

SpectrisAnnouncement

19/04/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220419:nRSS5579Ia&default-theme=true

RNS Number : 5579I  Spectris PLC  19 April 2022

Divestment of Omega Engineering and £300 million share buyback

·      Divestment of Omega for $525 million at 20.4x EBITDA

·      £300 million share buyback programme

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

Summary

19 April 2022 - Spectris plc (SXS: LSE) ('Spectris' or 'the Group' or 'the
Company'), the expert in providing insight through precision measurement,
today announces the sale of Omega Engineering ('Omega') to Arcline Investment
Management ('Arcline') for $525 million (£403 million), at a valuation of
approximately 20.4x Omega's 2021 adjusted EBITDA. Omega will be joining the
Dwyer Group of companies ('Dwyer'), an Arcline portfolio company. Alongside
this, Spectris also announces a £300 million share buyback programme.

Omega is a provider of specialist sensors that help customers improve
processes, delivered by a high service omni-channel distribution platform.
Dwyer is a global leader in the design and manufacture of innovative sensors
and instrumentation solutions for the indoor environmental quality, building
automation, process and environmental markets. Dwyer views Omega's
high-quality measurement, monitoring and control solutions as a highly
complementary product offering and sees benefits of a scaled platform within
their shared markets.

For the 2021 financial year, Omega generated sales of £129.0 million,
adjusted EBITDA of £19.7 million, and as at 31 December 2021, the book value
of Omega's gross assets was £197.7 million. The consideration for the
disposal will be settled in cash subject to customary adjustments for working
capital, cash and debt and is subject to customary completion conditions and
regulatory approvals, with completion expected to take place early in the
third quarter of 2022.

Supporting Omega's development and delivering value for Spectris

With new management and a revised strategy launched in 2020, Omega ended 2021
with a strong order book and well positioned for future growth; expecting to
return to pre-COVID levels of revenue this year. We have been clear that scale
is essential to deliver acceptable levels of profitability at Omega.  As
such, we believe that Omega's next stage of development can be better
fulfilled with the scale provided as part of a larger group.

At a valuation of 20.4x Omega's 2021 adjusted EBITDA, significantly above the
Group's current trading multiple, this divestment offers a better opportunity
to generate returns for shareholders and further enhance Group margins.

Since 2019, we have been working to transform Spectris into a higher-quality
business, focusing on attractive growth markets. This sale increases the gross
divestment proceeds over the past three years to over £1 billion, at
attractive valuations, above the Group's trading multiple. Following
completion of the sale of Omega, Spectris will be made up of three core
businesses: Malvern Panalytical; HBK; and Industrial Solutions, with a
much-improved financial profile, focused on high precision measurement
solutions.

Balance sheet strength provides opportunities to accelerate growth

The Group's enhanced balance sheet strength leaves us well positioned to
participate in further investment activity. The Group remains committed to
driving sustainable organic growth, with significant investment in R&D,
whilst continuing to evaluate value-enhancing M&A opportunities, from
early-life technologies, through bolt-ons, to larger scale acquisitions, as
well as collaborations with third parties. M&A remains a key strategic
component and provides opportunities to compound growth and returns. We will
remain disciplined in accordance with our stated capital allocation framework
and financial criteria for acquisitions.

Share buyback programme

Based on our enhanced balance sheet, projections for the year ahead and the
pipeline of acquisition opportunities, we are today announcing a share buyback
programme of up to £300 million. This will constitute an initial tranche of
£150 million to be launched shortly, and undertaken pursuant to the authority
granted by the Company's shareholders at the 2021 AGM, as well as a further
tranche of £150 million to be launched, subject to approval of the Company's
shareholders at the 2022 AGM, held on 27 May 2022.

Andrew Heath, Chief Executive, said:

"In 2018, we set out to improve the quality of Spectris and simplify our
business around a clear purpose of delivering value beyond measure to all our
stakeholders. Spectris today is a more focused, more profitable, and more
resilient business, underpinned by a very strong balance sheet. We are more
aligned than ever to end markets with attractive growth trajectories,
supported by key sustainability themes. The divestment of Omega will further
improve our financial profile.

Today's announcement is yet a further example of our approach to optimising
our assets and successfully divesting businesses at multiples higher than the
Group as a whole. This disposal, in conjunction with the share buyback
programme, delivers clear value for shareholders, whilst also allowing us to
take advantage of new growth opportunities for our core businesses, in line
with our purpose.

I would like to thank all of our Omega employees for their contribution to
Spectris over the years and wish them well in the next stage of their
journey."

For and on behalf of Spectris plc

LEI Number: 213800Z4CO2CZO3M3T10

Contacts:

Spectris plc

Siobhán Andrews

Head of Corporate Affairs

+44 20 4551 4549/+44 7920 230093

Jefferies

Tony White

David Genis

+44 20 7029 8000

Tulchan Communications

Martin Robinson

Giles Kernick

+44 20 7353 4200

About Spectris

Spectris' global group of businesses are focused on delivering value beyond
measure for all our stakeholders. We target global, attractive and sustainable
markets, where growth and high returns are supported by long-term drivers.
Precision is at the heart of what we do. We provide customers with expert
insight through our advanced instruments and test equipment, augmented by the
power of our software and services. This equips customers with the ability to
reduce time to market, improve processes, quality and yield. In this way,
Spectris know-how creates value for our wider society, as our customers
design, develop, test and manufacture their products to make the world a
cleaner, healthier and more productive place. Headquartered in London, United
Kingdom, the Company employs approximately 7,600 people located in more than
30 countries. For more information, visit www.spectris.com
(http://www.spectris.com) .

About Dwyer Instruments

The Dwyer Group of companies consists of a series of companies and brands
including Dwyer Instruments, Love Controls, Mercoid, WE Anderson, Proximity
and UFM. Dwyer is a global leader in the design and manufacture of innovative
sensors and instrumentation solutions for the indoor environmental quality,
building automation, process and environmental markets. Founded in 1931, Dwyer
Instruments is headquartered in Michigan City, Indiana, and has additional
offices in Asia, Europe and Australia. Dwyer was acquired by Arcline
Investment Management, a growth-oriented private equity firm, in 2021. To
learn more about Dwyer Instruments, visit www.dwyer-inst.com
(http://www.dwyer-inst.com) .

About Arcline Investment Management

Arcline Investment Management is a growth-oriented private equity firm with
$4.4 billion in cumulative capital commitments. Arcline seeks to invest in
technology-driven, meaningful to the world industrial businesses that enable a
better future. For more information visit www.arcline.com
(http://www.arcline.com) .

Disclaimer

Jefferies International Limited ("Jefferies") acted as sole financial advisor
to Spectris in relation to the transaction. Jefferies, which is authorised and
regulated by Financial Conduct Authority in the United Kingdom, is acting
exclusively for Spectris and no-one else in connection with the matters set
out in this announcement. Jefferies will not regard any other person as its
clients in relation to the matters set out in this announcement and will not
be responsible to anyone other than Spectris for providing the protections
afforded to its clients, nor for providing advice in relation to the matters
set out in this announcement, the contents of this announcement or any
transaction, arrangement or other matter referred to herein.

None of Jefferies nor any of its affiliates and/or any of its or their
affiliates' directors, officers, employees, advisers and/or agents accepts any
responsibility or liability whatsoever for, or makes any representation or
warranty, express or implied, as to, the truth, accuracy or completeness of
the information in this announcement (or whether any information has been
omitted from the announcement) and/or any other information relating to
Spectris and/or its associated companies, whether written, oral or in a visual
or electronic form, and howsoever transmitted or made available, or for any
loss howsoever arising from any use of the announcement or its contents or
otherwise arising in connection therewith.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DISUKSVRUOUSARR