Acquisition of Maxtec Halma has announced the acquisition of US-based Maxtec for $20.0m (£15.3m) funded out of existing facilities. Maxtec designs, manufactures and distributes oxygen analysis and delivery products for use in medical and non-medical applications, specialising in respiratory care. Maxtec has high market shares in a growing niche where demand is being driven by ageing populations and an increasing prevalence of heart and respiratory conditions. Maxtec will be managed as part of Halma’s Perma Pure business within the Medical sector of the Group with key members of its team remaining with the business. Financials and opportunity Management notes that market growth is 6-7% and revenues for the year to March 2019 were $20.4m (£15.7m) with EBIT of $1.8m (£1.4m). The deal looks good value in our view at sub 1x Sales and 11x EBIT, compounded by a footpath to the doubling of margins towards group levels over the next 2-3yrs. Based on the revenue and EBIT figures given in the statement this would suggest just under 0.5% EPS accretion for FY21. Our view and valuation This is yet another classic Halma acquisition, which is #9 for FY20, into highly regulated end markets which demonstrate structural demographic growth. There are good revenue synergy opportunities and potential to enhance both end market and geographical, opportunities on the Halma platform. The shares are trading on a FY21E PE of 34.4x and EV/EBITDA of 23.8x falling to 31.7x and 22.3x respectively in FY22E.