LONDON: Avon Rubber has signed an agreement to acquire 3M’s ballistic-protection business and the rights to the Ceradyne brand for an initial cash consideration of approximately $91 million, subject to closing and customary adjustments.
A further contingent cash consideration of up to $25 million is payable depending on the outcome of pending tenders, a release issued to London Stock Exchange (LSE) noted.
Operating primarily from three sites in the U.S. with approximately 280 employees, the 3M’s ballistic-protection business is a leading provider of next generation armour solutions, including ballistic helmets and body armour, and is a trusted supplier to U.S. and rest of world military and law enforcement customers.
In the year ended 31 December 2018, the 3M‘s ballistic-protection business delivered revenue of $85.4 million and EBITDA of $10.8 million.
Recurring annual net cost synergies of approximately $5 million are expected to be delivered in the first full year of ownership from integrating information technology systems and back office functions. The one-off costs to implement are expected to be approximately $10 million.
The initial cash consideration of approximately $91m, which is subject to closing and customary adjustments, is payable on completion and will be funded from existing cash resources and an increased three year revolving credit facility of $85 million.
The acquisition is expected to close in the first half of the Group’s 2020 financial year, subject to U.S. regulatory approvals and customary closing conditions.
Commenting on the Acquisition, Paul McDonald, Chief Executive Officer of Avon Rubber, said: “The acquisition of 3M’s ballistic-protection business is an important strategic step for Avon Protection.
The Business is a high-quality business, backed by proprietary technology, established contract platforms and well invested manufacturing operations. The combination of the Business and Avon Protection will significantly strengthen our technology and our personal protection product offering to an enlarged customer base, thereby accelerating the long-term growth prospects for the Group.
We believe that incorporating the Business into the Avon Protection portfolio will allow the business to expand more rapidly into Rest of World Military and Law Enforcement markets providing sustainable value creation for customers and shareholders. We look forward to welcoming the Business into the Avon Rubber family.
We are delighted to have identified an opportunity that fits our clear commercial and financial criteria, with a strong cultural fit. In the short term we will be focused on ensuring a successful and efficient integration of the two businesses and we look forward to continuing to make further strategic progress over the remainder of the year and beyond.”
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