LONDON: Spectris plc (SXS: LSE), the expert in providing insight through precision measurement, has agreed to acquire Micromeritics Instrument Corporation for an upfront consideration of $630 million (£485 million) plus a deferred element up to $53 million (£41 million) based on agreed financial performance metrics in 2024 and 2025.

This consideration equates to a multiple of under 14x based on expected 2024 EBITDA of $35 million (£26.9 million) and run rate cost synergies of $12 million (£9.2 million).

Micromeritics is a proven, high-growth, high-margin business with forecasted mid-teens revenue CAGR over the medium-term and will be immediately accretive to Group growth rates and margins

The acquisition is to be funded by a combination of existing cash resources and new external debt, utilising Spectris’ strong balance sheet.  We would expect leverage for the Spectris Group to be c.1x by the end of 2025 including the completion of the remainder of our £150 million buyback programme and acquisition of SciAps. The transaction is expected to complete in the third quarter

Headquartered in Norcross, Georgia, with 470 employees, Micromeritics is the world leader in analytical instrumentation for the physical characterisation of particles, powders, and porous materials across research, product development, and quality control. 

Micromeritics has a strong portfolio of industry-leading, gold-standard technologies, covering a wide range of fundamental particle measurements including: surface area; particle activity; porosity; powder flow; and density.  Micromeritics also has a strong track record of innovation and pipeline of new products.

Micromeritics serves a diverse customer base in a range of end markets, with over 80% of sales sold directly to customers, with c.40% of sales in clean-tech which is growing at a rapid pace including batteries, hydrogen/fuel cells, carbon capture/storage; and c.60% of sales in industrial-tech covering the material science of chemicals, pharmaceuticals and semiconductor, plus a diverse set of other high-growth industrial technology end markets.  

Micromeritics has a proven track record and is growing rapidly, delivering a sales CAGR of 17% for the period 2021-2024E and is expected to grow double-digit, on a standalone basis over the medium-term.  Micromeritics’ exposure to structural growth markets of industrial-tech and clean-tech is expected to provide further strong growth opportunities.

Operating at the premium end of its markets, Micromeritics is a high-margin business expecting to generate an EBIT margin of 25% in 2024 which is expected to increase over the medium-term as the company grows.  Micromeritics is expected to deliver EBIT of $33.4 million (£25.7 million) in 2024.

This acquisition is strongly aligned with Spectris’ Strategy for Sustainable Growth.  Together with Malvern Panalytical, the combination will create the leading particle characterisation business for advanced materials analysis, with a highly differentiated and fully integrated offering. 

The addition of Micromeritics’ technologies alongside Malvern Panalytical’s capabilities – encompassing particle distribution, particle count and zeta potential – will enable the comprehensive characterisation of particles by detailing their size, count, surface properties and behaviour, thus supporting the entire customer workflow from R&D to QC/QA applications.

With highly complementary product portfolios, the combination will also strengthen Spectris’ offering in the rapidly growing, clean tech markets and will deliver significant synergies.

In addition to the recently announced acquisition of SciAps, the acquisition of Micromeritics further broadens Malvern Panalytical’s customer offering and strengthens Spectris Scientific’s product portfolio.

Andrew Heath, CEO of Spectris said: “The acquisition of Micromeritics fits perfectly with our strategy to build world-class businesses compounding growth and generating strong value creation for our customers and shareholders. Micromeritics is a high-quality business with a strong track record of growth and innovation with excellent growth prospects.

The combination of Micromeritics with Malvern Panalytical is highly synergistic.  It will create the global market leader in particle characterisation for advanced materials analysis with a differentiated offering and strong competitive positioning in end markets benefiting from long-term, secular and sustainability growth trends. Together with SciAps, this adds to our confidence in being able to deliver against our medium-term financial objectives of 6-7% growth and margins in excess of 20%.”

Terry Kelly, President and CEO of Micromeritics, said: “Our market-leading technologies are used daily in the labs of the world’s most innovative companies and institutions.  Our end markets are strong and growing, and we have a robust new product pipeline.

The combination with Malvern Panalytical is very powerful. I am really looking forward to working together to unlock more answers for customers and provide expert applications and technical support that cannot be matched by any other company or combination of companies.  Becoming part of the Spectris Group is a perfect fit for our technologies, our customers, and most importantly our people.”