FTSE 100 steam management systems specialist Spirax-Sarco Engineering (SPX) is in exclusive negotiations to acquire French firm Thermocoax from Chequers Capital for £139m on a cash-free, debt-free basis.

The deal is expected to be earnings accretive in the year to 31 December 2019, yet shares in Spirax are barely changed at £67.08.

Spirax shares are roughly 9% below their one-year high of £73.45 as concerns over Brexit uncertainty and limited visibility of its order book has weighed on performance.


Over the last five years, Thermocoax’s growth in the US has been limited due to a lack of critical mass.

By making it part of its Chromalox business, Spirax believes it can capitalise on the French firm's ‘significant potential’ in the US market.

‘Chromalox has the scale, contacts and reputation in the US that can support faster penetration of the market, as well as enhancing its offering to its own customers,’ according to the press release.

The US is not the only area where the UK firm expects to benefit from the acquisition as the firm believes Thermocoax will significantly boost its electrical process heating business in Europe.

Outside of the US and Europe, the acquisition will also allow the group to accelerate its direct sales investment.


Thermocoax designs engineered electrical thermal solutions, including its mineral insulated cable, which resists high temperatures, pressures and radiation, making it ideal for heaters and sensors.

The company is headquartered in France and has three manufacturing facilities in Normandy, one in the US and another in Germany.

Investors should note that Spirax will need regulatory approval in France, Germany and the US to go ahead with the deal. These are expected to come through in the second quarter of 2019.

Last year Thermocoax delivered sales of £43.9m and earnings before interest, tax, depreciation and amortisation (EBITDA) of £11.4m meaning Spirax is paying just over 12 times historic EBITDA.

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Issue Date: 18 Feb 2019