LONDON, UK: discoverIE Group announced the sale of Acal BFi, the Group’s electronic component distribution business for £50 million, a bourse filing said on Tuesday.
The company has agreed to sell Acal BFi to H2 Equity Partners, for a total cash consideration of £50m, on a debt free, cash free basis, comprising an upfront payment of £45m, together with £5m of deferred consideration.
The Transaction is subject to certain consultation requirements and regulatory approvals, with completion expected in the current financial year. Sale proceeds will be used to reduce the Group’s net debt and to progress the design and manufacturing growth strategy.
For the year ended 31 March 2021 (FY21), Acal BFi reported revenues of £148.7m, profit before tax of £4.0m and gross assets of £60.1m. The total consideration represents a multiple of approximately 7x pre-Covid average underlying operating profits.
Acal BFi is a European specialist electronic components distributor, with operating companies in the UK, Germany, France, Italy, the Nordic region and Benelux and will continue under its existing management team, led by Paul Webster.
Following the planned disposal of Vertec SA announced last month, the sale of Acal BFi concludes discoverIE’s exit from its Custom Supply distribution business and leaves the Group wholly focused on design and manufacturing, the principal driver of the Group’s financial performance.
The Group’s D&M division has grown strongly over the last 10 years, both organically and through acquisitions. In FY21, D&M accounted for 65% of Group revenues and 87% of Group underlying profit contribution with an operating margin of 12.7% (compared with 3.6% in Custom Supply).
The D&M businesses are focused on markets with long term structural growth drivers, namely renewable energy, medical, transportation and industrial & connectivity. In FY21, sales into these four target markets accounted for 75% of D&M revenue.
Including its recent acquisitions, the division generates c. 40%3 of its sales outside Europe. Acal BFi will continue to sell the Group’s D&M products, building on the successful cross selling activity of previous years.
On completion, proforma gearing4 at 30 September 2021 will reduce to 1.0x, well below the Group’s target range of 1.5x to 2.0x. The Group continues to have a strong pipeline of further D&M acquisition opportunities and the sale proceeds provide additional capacity to progress the Group’s growth strategy.
Nick Jefferies, Group Chief Executive of discoverIE, said: “The Group has developed significantly in recent years, with a substantial and higher growth design and manufacturing business becoming the core of operations. The sale of Acal BFi concludes the Group’s exit from the business of distribution, with discoverIE becoming solely a global designer and manufacturer of customised electronics with higher operating margins, and provides additional resources to invest further in our growth.
We are pleased to have found a new home for Acal BFi so that it can continue to grow under the existing management team, who have served discoverIE well over many years. We wish them and the whole Acal BFi workforce every success under their new ownership.
As recently announced in our trading update, the ongoing Group delivered an excellent performance in the first half of the current financial year with a record order book alongside strong growth in orders and sales compared with last year and also the pre-covid period two years ago.
With a clear strategy focused on long-term, high quality, structural growth markets across Europe, North America and Asia, a diversified customer base and a strong pipeline of acquisition opportunities, the Group is well positioned to make further progress on its key priorities.”
discoverIE Group plc is an international group of businesses that designs and manufactures innovative components for electronic applications.
