SYDNEY, AUSTRALIA: IPD Group Limited (ASX:IPG), a leading provider of electrical products and services, has announced a deal to acquire CMI Operations Pty Ltd, a distributor of electrical cables and plugs, from Excelsior Capital Limited (ASX:ECL) for up to $101 million.

The acquisition will enhance IPD’s product portfolio, supplier diversity, customer value proposition and market reach, as well as deliver significant earnings accretion and synergies.

CMI Operations, founded in Sydney in 1991, is a well-established player in the Australian electrical industry, with a strong presence in the cable and plug segments. CMI distributes a wide range of electrical cables from leading manufacturers, as well as producing and distributing its own plug brands, such as Clipsal, Ampere and Voltex.

The acquisition will be funded by a combination of new debt facilities and a fully underwritten equity raising of $65 million, comprising a $40 million institutional placement and a $25 million accelerated non-renounceable entitlement offer. The equity raising will be conducted at an offer price of $1.60 per share, representing a 9.6% discount to the last closing price of $1.77 on November 27, 2023.

The acquisition is expected to be completed by the end of December 2023, subject to customary conditions and regulatory approvals. IPD expects the acquisition to result in pro forma FY23A EPS accretion of over 30% (excluding synergies), and to generate annual cost synergies of $4-5 million within two years of completion.

IPD also provided a guidance for its H1 FY24 EBIT, which is expected to be between $13.5-14.0 million, reflecting the strong performance of its core business and the contribution from the acquisition.

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