LONDON, UK: Volex plc, the global supplier of integrated manufacturing services and power products, has signed a share purchase agreement for the acquisition of the entire issued share capital of Prodamex SA de CV and Terminal & Cable TC Inc., for a total consideration of CAD$22.5 million.
The consideration will be paid in cash from the Company’s existing debt facilities at completion, expected to be in Q3 FY2022 subject to customary closing conditions including regulatory approvals in Canada.
Prodamex and TC are autonomous operating businesses being acquired from an investment holding company based in Canada and will expand Volex’s capabilities in the key North American market in the domestic appliance, defence and off-highway industries.
The transaction will be earnings enhancing from completion.
Strategic Rationale – Prodamex
· Prodamex provides an advanced manufacturing facility serving customers in Mexico, the USA and Canada. This facility delivers additional manufacturing capability in Central Mexico, tailored to the delivery of higher volume requirements. This will complement Volex’s manufacturing plants in Tijuana and Juarez and will create additional flexibility for customers
· The business has longstanding expertise in wire harnesses for domestic appliances and provides cross-selling opportunities with Volex’s existing investments in DE-KA and the recently expanded facility in Batam, Indonesia, establishing a global low-cost presence to service the white goods and commercial markets
· Creates opportunities for further cost synergies through leveraging our global supply chain
Strategic Rationale – TC
· One of the largest wire harness manufacturers in Canada with over 50 years’ experience, and a leading defence supplier, establishing a strong Canadian market presence for Volex
· Complements the recent Irvine acquisition and broadens Volex’s defence market capabilities into armoured vehicle solutions, offering opportunities to support long-term customer programmes
· Ruggedised wire harness capabilities allowing expansion into the attractive “off-highway” market sector supporting industrial, agricultural and construction machinery manufacturers
Commenting on the Acquisition, Nat Rothschild, Executive Chairman of Volex said: “The acquisitions of Prodamex and TC further expand our geographic coverage and technical capabilities in North America. Each of these businesses represent a compelling acquisition in markets that offer us growth opportunities.
Prodamex complements the recent acquisition of DE-KA in the white goods market, expanding our capabilities into the North American market while TC builds on the recent acquisition of Irvine and our strategic intent to develop Volex’s presence in the defence market, broadening our offering into military vehicle wiring harnesses.
These acquisitions are a further indication of our ability to identify and acquire attractive businesses for compelling valuations. Our buy and build strategy, along with our pursuit of operational excellence and organic growth, are a key element of our strategy as we target $650 million in revenues and $65 million of underlying operating profit by 2024.”
Volex PLC share price
429.50 GBX+19.00 (4.63%)today
7 Oct, 5:07 pm GMT+1 ·Disclaimer
Leave a Reply