The contract, with the US Defense Logistics Agency, will see the UK business provide enhanced body armor plates, effectively bullet-proof protection for military personnel.
The first order is anticipated shortly, with deliveries expected to commence in early 2021. Avon Protection would invest up to $5m in capital expenditure across financial years 2020 and 2021 to obtain product approvals and to expand production capacity.
The framework contract works to an initial 18-month duration but has scope for two 12-month extensions. The base contract had a minimum value of $19m.
LEVERAGING CERADYNE DEAL
These body armor plates were a legacy product of 3M's Ceradyne ballistic-protection business, which Avon Rubber bought at the start of this year (2 January).
'The successful award of this contract triggers $3m of the contingent consideration payable to 3M under the terms of the acquisition, as announced on 7 August 2019’, the company said. ‘Additional contingent consideration will become payable on receipt of orders under this contract, with the maximum total contingent consideration payable to 3M being $25m,' it added.
Shares in Avon Rubber rose 65p, or roughly 2.5%, to £26.25.