Electronics engineer DiscoverIE (DSCV) has ploughed £77 million on acquisitions in the US and UK as it continues to expand its presence in the customised electronic components industry.
US firm Logic PD, better known as Beacon, makes embedded computing boards and is being acquired for $80.5 million (£58.8 million) cash.
It had sales of $28.1 million in 2020 and an underlying profit of $6.8 million. Closer to home, Antenova, a UK firm that makes antenna and radio frequency modules , has been acquired for £18.2 million. Its sales this year are expected to be £8 million with underlying profits of £2.3 million.
DiscoverIE will help fund the deals through a £55 million placing of new shares priced at £10.28.
Encouragingly, demand for the new shares was so high that DiscoverIE upped its original cash raising ideas from £45 million.
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On Friday the stock jumped nearly 15% to £11.75. Regular Shares readers will know that we suggested buying shares in the company in December last year when the stock was trading at 600p.
In its statement, the company said the two purchases will expand its footprint significantly in North America and increase revenues from outside Europe for the Design & Manufacturing division to 40% and to 31% for the group overall.
Both acquired businesses generate operating margins in excess of 20%, the statement added, and would have raised margins by 0.8 percentage points last year on a proforma basis as well as being immediately earnings enhancing.
‘The earnings accretive acquisitions of Beacon EmbeddedWorks and Antenova continue our strategy of building a high quality, high margin international group that designs and manufactures differentiated and customised electronics,’ said Nick Jefferies, DiscoverIE’s chief executive.
‘Both Beacon and Antenova have long-established track records of supplying high-quality products, mostly into our core target markets, and are therefore well-positioned to exploit a range of growth opportunities.’
