Diploma PLC on Thursday announced it acquired a Tennessee-based aftermarkets parts distributor and announced a capital raise to refinance the acquisition.

The specialised technical product supplier said it acquired Tennessee Industrial Electronics LLC, a Nashville-based aftermarkets parts distributor, for £76 million.

Chief Executive Johnny Thomson said: ‘TIE is an excellent business in an exciting end market and has a track record of delivering strong growth at high margins. We welcome our new colleagues into the Group. TIE is a good example of the quality of opportunities that we have in our pipeline. Alongside our relentless focus on organic growth, we see significant potential to strengthen the group further with disciplined acquisitions that accelerate future organic growth, while maintaining our strong financial position.’

In order to fund the acquisition, the firm launched a capital raise of around 7.5% of its current share capital on Thursday.

The proceeds of the capital raise will be used to refinance the acquisition of Tennessee Industrial Electronics, as well as provide the company with ‘greater flexibility’ to execute on its mergers & acquisitions pipeline to accelerate future organic growth, Diploma said.

The company announced it intends to conduct a non pre-emptive placing of shares at 5 pence each. In addition, it said all of the directors of the company intend to subscribe for shares at the placing price to contribute around £100,000.

Further, Diploma said it intends to make an offer on the PrimaryBid platform of shares at the placing price to ‘provide retail investors with an opportunity to participate in the equity fundraise.’

The FTSE 250-listed company added that both the subscription and the retail offer are conditional on the placing, but said the placing is not conditional on the subscription or the retail offer.

Away from the TIE acquisition, Diploma said it has delivered ‘very strong’ organic growth of 10% during the first quarter of its financial year and reported growth at 30%.

The London-based firm explained this was due to a strong contribution from ‘high quality acquisitions’, and its operating margin remained consistently strong at financial 2022 and financial 2021 levels.

As a result, Diploma said the outlook for financial 2023 is ‘positive’ and consistent with its full-year guidance. Diploma’s financial year ends September 30.

Shares in Diploma finished 0.8% higher at 2,605.53 pence on Thursday in London.

Copyright 2023 Alliance News Ltd. All Rights Reserved.