The complementary addition to the Group will add "incremental value" to its PMC division.
Companies: Flowtech Fluidpower plc
Flowtech Fluidpower (LON: FLO) has announced today it will acquire HES Group in a £4.1m takeover of the Gloucester-based hydraulics company.
Management said the acquisition:
"...provides another complementary business to the Group's PMC division, delivering incremental revenue through a mix of wider technical applications, reinforces our offer to the off-highway market and adds aerospace to our sector coverage."
HES will form a new division for the Group, which will "represent the final element of the multi-channel strategy outlined at the time of the Group's IPO in 2014". The HES acquisition is the sixth for Flowtech this year.
The £4.1m will be paid as £3.1m in cash, with the further £1m to be issued as 661,000 shares in the Group to HES CEO Stuart Diesel.
Flowtech shares were trading up 4.5% off the back of the announcement.
Chief Executive of Flowtech Fluidpower Sean Fennon commented:
"We are delighted to add the technical skills and knowledge of this long-established business to the Group; HES adds new brands and sectors to our portfolio; it also gives us the opportunity to build our fourth leg in technical maintenance which enhances our overall service offering to our customer network. This move clearly reinforces our ongoing strategy to develop a focused Fluid Power Group that serves a wide number of industry sectors, allowing a de-risking of some of the cyclic nature of the business."
Corporate broker Zeus Capital commented in their note on the Group this morning:
"Our forecasts move higher to reflect the contribution from the acquisition. The impact in FY17 is minimal with less than a 1% increase in earnings, as we are less than three months from period end. FY18, the first full year the acquisition will impact, revenue increases c.12% leading to c.7% increase in PBT and 5% in earnings."
FLO is currently trading at an all-time high of 165p with a market cap of £83m, after riding a number of ebbs and flows since the Group IPO'd in May 2014.
