LONDON, UK: The 600 Group PLC (AIM: SIXH), the diversified industrial engineering company, and certain other Group companies have entered into a conditional sale and purchase agreement with Timesavers Acquisition LLC relating to the disposal of the entire issued share capital of each of 600 UK Limited, Colchester GmbH, 600 Machinery Australia Pty Ltd and Clausing Industrial, Inc, which together comprise the Group’s Machine Tool Solutions Division.
Total cash consideration of US $21 million is payable on completion. The disposal will complete the shift of the Group’s strategy towards its growing industrial laser systems business.
The net proceeds of the disposal will provide the Group with the resources with which to pay down its existing debts and provide significant additional resources with which to invest in organic and inorganic growth strategies focused on industrial laser systems.
Paul Dupee, Chairman of The 600 Group, commented:
“The Group’s strategic focus on our industrial laser systems businesses has already successfully generated higher margins, large new customer wins and a record order book. The proposed disposal of our Machine Tool Solutions Division is the culmination of this strategy and will provide the Group with the funds to strengthen our balance sheet and further accelerate the growth of our laser division.
“Industrial lasers are deployed by the Group’s blue-chip customers across multiple industries and applications. The investment we have made to date in our two laser businesses – Control Micro Systems and TYKMA Electrox – puts the Group in a commanding position to offer higher-margin, customised products with the pricing power to withstand market pressures. We believe this is a highly attractive yet fragmented market and we will now be even better positioned to focus the Group’s efforts on capitalising on this opportunity.”
Background to and reasons for the Disposal
On 15 November 2021, the Company announced that trading in the first six months of its current financial year saw a strong recovery from the COVID-19 pandemic with industrial activity now back above pre-Covid-19 pandemic levels and a record order book and enquiry pipeline. The Company announced that it had continued to see particularly strong demand in its Laser Division; with Control Micro Systems Inc, winning large new orders and TYKMA Inc. continuing to transition from commoditised products to a more custom machine focus.
The Board considers that the industrial laser system market is highly attractive and has for some time been transitioning the Group’s strategy towards this division. The Laser Division’s internal sales operation and distribution network now serves both TYKMA Electrox and CMS and further synergy benefits are being gained in cross fertilization of technology and product knowledge between the two businesses.
The Disposal, if approved by Shareholders and completed, will complete the Group’s shift towards its higher-margin industrial laser systems business, for which the Group continues to see particularly strong demand within a highly fragmented market, notwithstanding disruption and price increases in the supply chain. For the first half of the current financial year, the industrial laser systems division had revenues of $15.2 million (H1 FY21: $9.8 million) and operating profit of $1.8 million (H1 FY21: $0.2 million).
In the six months ended 30 September 2021, the assets of the Disposal, being the Group’s Machine Tool Solutions Division, generated unaudited revenues of $18.8 million (H1 FY21: $15.5 million), unaudited adjusted operating profit of $0.8m (H1 FY21: $0.7 million) and had net assets of $21.6 million, excluding allocation of head office and other unattributed liabilities. The Machine Tool Solutions Division had also been subject to disruption and price increases within its supply chain, which has been affecting the wider industry.
The Company continues to perform in line with the Board’s expectations with both the total order book and the Laser Division order book up over 70% year on year.
The net proceeds of the Disposal will provide the Company with the resources with which to pay down the Group’s existing debts and provide significant additional resources with which to invest in organic and inorganic growth strategies as an industrial laser system focused Group.
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