Patent translation services firm RWS (RWS:AIM) gains 5% to 181p in early trade as it secures a sizeable acquisition in the US that expands its life sciences customer base.
RWS is buying Connecticut-based Corporate Translations Inc. (CTi) for $70 million (£46 million) in a deal funded through existing cash resources and a five year debt facility with Barclays (BARC).
Earnings before interest, tax, depreciation and amortisation (EBITDA) for Corproate Translations is expected at $7 million for the year to 31 December 2015 and chief executive Andrew Brode expects the deal to be 'immediately and significantly earnings enhancing'.
'We are delighted to have acquired CTi, which greatly expands our exposure to the attractive and growing life sciences sector through a world leading language services provider in this field,' says Brode.
'With its focus on supporting its clients in the delivery of their intellectual property pipelines, CTi is an excellent fit with RWS' leading position in intellectual property service provision.'
Co-founders of CTi Mary and Ted Gawlicki will stay with the business for up to a year.
RWS is set to report full year results for the year to 30 September on 8 December. An October trading update indicated profit-before-tax would be in excess of the £22.1 million previously forecast by analysts.
Trading in 2016 looks likely to be tougher because of a currency weakness in Europe, where RWS bills much of its work.
Analysts had expected earnings per share to decline slightly in 2015/16 as a result but the CTi deal could now see forecasts upgraded.