Shares in Spirax rose 6% on Friday following news of the accretive acquisition
Companies: Spirax Group plc.
Engineering firm Spirax-Sarco said on Friday that it has agreed to acquire US-based Chromalox for $415m (£320m). News of the deal sent Spirax shares up 6% early on Friday.
Chromalox, which provides electrical products for industrial process heating, recorded £154m in revenues last year, and £33m in EBITDA. Almost 70% of sales came from direct sales with the remainder through distributors. It has good earnings visibility, with about two-thirds of total revenues from recurring revenues.
Speaking about the news, Spirax said:
"We will invest in Chromalox to strengthen its direct sales channels globally; leverage our worldwide footprint to grow Chromalox's presence outside of its core markets in the USA, and support the company's research and development programme to ensure that it continues to deliver innovative new products to customers."
The deal will be dependent upon regulatory approval in the USA, which the company says is likely to be satisfied during the Q2.
CEO Nicholas Anderson said he was delighted with the deal, which represents an "excellent" opportunity to expand Spirax Sarco's addressable market:
"As we invest in strengthening the company's direct sales and leverage Spirax Sarco's global footprint and expertise, Chromalox will enhance our growth and provide sustainable value creation for customers and shareholders."
