LONDON: Essentra PLC (LON: ESNT) subsidiary Essentra Overseas Limited has signed an agreement to purchase the business of Jiangxi Hengzhu Electrical Cabinet Lock Co., Ltd via a newco, a news release said.
Closing of this transaction is subject to customary conditions, including regulatory approval and incorporation of the newco, and is anticipated in Q3 2021.
Essentra will initially hold a 73% stake in the newco, with the remainder held by the current principal owner of Hengzhu. The remaining 27% stake is subject to put and call options whereby Essentra may acquire the minority shareholding for a consideration determined by future operating performance and capped to a maximum upper limit of ¥37.5m (or c.£4m).
The initial consideration to be paid by Essentra for this transaction is ¥100m (or c.£11m), which will be fully funded from existing facilities.
Hengzhu is an access hardware manufacturer and distributor in China. The business operates from a single facility in Yichun, Jiangxi and has a workforce of c.490 employees.
The majority of Hengzhu’s sales (c70%) are domestic and the business serves over 7,000 customers which are typically mid-sized industrial manufacturers focused on market categories such as data centre storage equipment and power distribution.
Commenting on today’s announcement, Paul Forman, Chief Executive said: “This transaction strengthens our position in China, enabling us to expand our access hardware range. Hengzhu has excellent growth prospects and is a strong fit for the Components division. We have proven strong cross selling opportunities for this product range in Europe and Hengzhu provides us with the ideal platform to further penetrate Asia. There is also scope to leverage our operations expertise to increase the efficiency of the business. This transaction is earnings accretive and will deliver sustainable value to Essentra over the long-term.
I would like to welcome all at Hengzhu to the Essentra family and wish them every success.”
Essentra PLC (LON: ESNT) is a FTSE 250 company and a leading global provider of essential components and solutions. Organised into three global divisions, Essentra focuses on the light manufacture and distribution of high volume, enabling components which serve customers in a wide variety of end-markets and geographies.
Headquartered in the United Kingdom, Essentra’s global network extends to 34 countries and includes 7,065 employees, 50 principal manufacturing facilities, 32 sales & distribution operations and 3 research & development centres.
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12 May, 4:35 pm GMT+1 · Disclaimer
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