LONDON, UK: Chemring Group announced that a conditional agreement has been entered into for the sale of its US subsidiary Chemring Ordnance, Inc. to Nammo Defense Systems Inc. for a cash consideration of $17 million. The consideration will be paid in cash on completion, subject to a working capital adjustment.
This sale completes the Group’s exit from its commoditised energetics businesses. The sale, which is subject to regulatory approval by the US authorities, is expected to complete no later than the end of Q2 FY20.
Chemring Ordnance, located in Perry, Florida, manufactures a range of ordnance and pyrotechnic products primarily for military customers. In the year ended 31 October 2018, Chemring Ordnance generated revenue of $57 million, an underlying operating loss of $0.2 million, had gross assets of $20.5 million and net assets of $11.3 million.
The business was treated as discontinued in the Group’s 2018 financial statements and for the year ended 31 October 2019 made a small operating loss.
The proceeds after costs will be used by the Group for general corporate purposes. Nammo is an international aerospace and defence company headquartered in Norway. With 2,400 employees across more than 30 sites and offices in 13 countries, the company is one of the world’s leading providers of ammunition and rocket motors for both military and civilian customers.
Following a strategic review, the Group announced in November 2018 its intention to exit the commoditised energetics businesses located in Derby and Florida, and to focus on its niche specialist energetic devices and materials businesses in Chicago, Scotland and Norway, where the Group has strong intellectual property and high barriers to entry.
Michael Ord, Chief Executive of Chemring, said: “I am pleased to announce the sale of Chemring Ordnance to Nammo. This transaction is another step in the delivery of our strategy and provides a greater focus on our growing and differentiated positions in Sensors & Information and Countermeasures & Energetics. Today’s announcement concludes the process of exiting the Group’s commoditised energetics businesses and further improves the quality of the Group and its future earnings.”