LONDON: Solid State plc announced the acquisition of Willow Technologies Limited and its subsidiaries for an initial consideration of £10 million, which, when adjusted for the cash on the balance sheet, results in an effective net initial consideration of approximately £5.5 million.
The Company has acquired the entire share capital of Willow Technologies for an initial cash consideration of £10m, which, on a cash free debt free basis, results in an initial net consideration of approximately £5.5m.
In addition to the initial consideration there is a 12 month earn out period. The earn out consideration will be calculated as a function of the post-tax profit of Willow Technologies for the period 31 March 2022, subject to a minimum profit threshold of £700,000. The maximum earn out consideration payable is £3.5m.
Willow Technologies, founded in 1989, is a highly respected value added distributor of electro-mechanical components operating within the UK, Germany, Spain and the USA. Willow Technologies’ specialisms are in switching, sensing, resistive devices and hermetic seal solutions, the company sells a wide portfolio of electromechanical technologies. Willow is ISO9001: 2015 registered.
American Electronic Components Inc. (AEC), founded as Durakool in 1935 and acquired by Willow Technologies in 2006, is based in Indiana USA. AEC specialises in the design, manufacture and distribution of component level, electro-mechanical switching, sensing and glass to metal seal solutions. The company has over 85 years of applications experience with a well-established and loyal customer base. AEC is ISO9001: 2008 and ISO14001:2004 Registered.
For the year ended 31 March 2020, Willow Technologies reported revenue of £10.3m, profit before tax of £0.45m and had net assets of £7.0m.
The acquisition of Willow and AEC into the Value Added Supplies division of Solid State meets a significant number of strategic priorities and offers the opportunity for future growth in multiple structural markets and geographic territories. Furthermore, the Acquisition meets the objective of increasing the division’s penetration of the strategically important, EV, EV charging, green tech and medical markets.
The consequent acquisition of the Durakoolâ and Hermasealâ established brand names and associated patents brings further opportunity for growth through product development and the extension of the brand to potentially cover other products within the Group.
The widening of the product offering within the Value Added Supplies division will bring greater resilience to the business, access to a wider customer base and increase the importance of the division to its existing customer base.
Whilst the Acquisition falls under the Value Added Supplies division it is expected that both Willow and AEC will operate as stand-alone companies throughout the earn out period. Both companies are however expected to benefit from access to the wider resources available in the Value Added Supplies business and in particular from access to the wider customer base.
Post-acquisition a detailed strategic appraisal of non-core manufactured components will be undertaken to evaluate whether or not they should be discontinued with an appropriate last time buy process implemented in order to improve strategic focus and production efficiencies.
Commenting on the acquisition, Gary Marsh, Chief Executive of Solid State, said: “It is very rare to find a company that so clearly meets the strategic imperatives that we have set for the Group. The acquisition of Willow and AEC dovetails nicely into our Value Added Supplies division, increasing our geographic reach and own brand products whilst providing a springboard for growth in the USA. I would like to take this opportunity to welcome the teams at both Willow and AEC into the Solid State Group of companies.”
Commenting on the Acquisition, Mark Del Giudice, Chief Executive of Willow Technologies, added: “By joining the Solid State Group, we have become part of a dynamic organisation which shares our approach to providing niche products to new and developing growth markets. Our product portfolios complement one another and we will work together to ensure growth for both our business partners and our staff. I look forward to the next chapter of our business development and becoming part of the Solid State Group’s future.”
Solid State plc (SOLI) is a value added electronics group supplying commercial, industrial and military markets with durable components, assemblies and manufactured units for use in specialist and harsh environments. The Group’s mantra is – ‘Trusted technology for demanding applications’.