TT Electronics has agreed to acquire the entire issued and to be issued share capital of Stadium.
Stadium shareholders will be entitled to receive 120p in cash for each Stadium share, which values the business at approximately £45.8 million.
In addition, the Stadium board has declared a special dividend of 2.1p per Stadium share.
The transaction represents a premium of approximately 43.7% to the closing price of 83.5 pence per Stadium share on 14 February 2018.
The transaction is the first acquisition by TT following the disposal of TT's Transportation Sensing and Control Division in 2017, and follows TT's stated strategy to focus on areas of structural growth where there is increased electronic content and greater product differentiation.
TT said the deal would provide a greater presence in attractive segments of the industrial, medical, aerospace and defence and transportation sectors; enhanced product capabilities in power electronics and connectivity, adding more scale to the respective businesses of both TT and Stadium; extended research and development (R&D) capabilities; and a complementary customer base, providing cross selling opportunities for both businesses.
The transaction will be funded entirely from TT's existing cash resources and committed bank facilities.
TT expects the transaction to be immediately earnings enhancing, and to meet its targeted return on capital hurdle rate in the year ending 31 December 2020.
Richard Tyson, CEO of TT, said: "The acquisition of Stadium is an important step to accelerate our strategy of building leading positions in sectors where increasing electrification is fuelling demand for our highly engineered electronic solutions.
"We look forward to welcoming Stadium's employees and combining power electronics capabilities and R&D expertise to drive growth for the combined business. Stadium will add complementary technologies including connectivity offerings, in industries we already know well. We remain committed to deploying our resources to accelerate growth through capital investments and acquisitions to enhance TT's potential and create value for our shareholders."
At 9:12am: (LON:TTG) TT Electronics PLC share price was +9p at 219p