LONDON: Renold plc, a leading international supplier of industrial chains and related power transmission products, has acquired the trade and net assets of MAC Chain Company Ltd (U.S.) and the entire issued share capital of MAC Chain Company Limited (Canada), for a total cash consideration of US$31.4 million.
MAC Chain is being acquired on a cash free debt free basis, and will consist of an initial cash consideration of US$28.26 million, followed by two further cash payments of US$1.57 million, payable 12 months and 24 months from the anniversary of completion of the Acquisition.
The total consideration for the Acquisition of US$31.4 million represents an acquisition multiple of c.7.5x twelve months to June 2024 EBITDA.
Realising the initially identified hard synergies will result in the multiple reducing to 6.9x, in the initial year of ownership, reducing to well below 6.0x in subsequent years.
The acquisition was funded utilising the Group’s existing borrowing facilities. As at 31 March 2024, the Group’s net debt to EBITDA multiple was 0.6x and following completion of the acquisition, it is expected to be below 1.2x.
With continuing expected strong cash generation, and following completion of the Acquisition, there remains sufficient facility headroom to execute the identified pipeline of further bolt-on opportunities.
MAC Chain reported revenue of US$ 25.8m for the twelve months ended June 2024, generating an EBITDA of US$4.2 million, and a PBT of US$3.5m. Tangible net assets acquired, are anticipated to be US$11.5m.
Commenting on the acquisition, Robert Purcell, Group Chief Executive of Renold, said: “We are delighted that MAC Chain is to join the Renold Group and that not only are we buying an excellent business, but also retaining the services of a very talented group of managers and employees.
The acquisition of MAC Chain considerably expands and strengthens our North American Conveyor chain offering.
“MAC Chain is our third CVC acquisition in a little over 2 years and builds our momentum as we execute our deal pipeline.
Reduced leverage has been driven by strong operational performance over recent periods, leading to a strong balance sheet and a conservative level of debt, allowing us to accelerate the growth of the business through complementary bolt-on deals.”