LONDON, UK: discoverIE Group (LSE: DSCV), a leading international designer and manufacturer of customised electronics to industry, has announced the acquisition of Magnasphere Corporation.

Magnasphere Corporation, a US-based designer and manufacturer of magnetic sensors and switches for industrial electronic applications, is being acquired, for a cash consideration of $22m (£19.1m) on a debt free, cash free basis, before expenses, which will be funded from the Group’s existing debt facilities.

Vendor shareholder approvals for the transaction are expected to be received during the final quarter of this financial year. Once completed, the acquisition is expected to be immediately accretive to Group underlying earnings and underlying operating margin.

Magnasphere, founded in 2002, designs and manufactures high performance magnetic sensors and switches for industrial electronic markets including access control, data centres and specialist vehicles. The business, which is currently majority owned by management, is based in Waukesha, Wisconsin, with manufacturing facilities in Goshen, Indiana.

The business will operate within the Group’s Variohm cluster of specialist sensor businesses as part of the Sensing & Connectivity division whilst retaining its distinct brand identity. Under succession plans, management shareholders will transition leadership to existing ongoing management over a period of up to twelve months.

Revenues for the year ended 31 December 2021 were $6.8m (£5.7m) with a reported pre-tax profit of $1.9m (£1.6m), and an operating margin of 28%. Gross assets at 31 December 2021 were $5.9m (£5.1m). The business has continued to grow well in 2022.

Following completion of the acquisition, the Group’s proforma gearing as at 30 September 2022, the Group’s most recent six month period end, increases from 0.8x to 1.1x, remaining below our long term target range of between 1.5 and 2.0x, leaving capacity for further acquisitions. The pipeline of acquisition opportunities in development remains strong.

Nick Jefferies, Group Chief Executive of discoverIE plc, said: “This acquisition of Magnasphere continues our strategy of building a differentiated, international, growth focused electronics Group with strong operating margins. The transaction brings another high quality business into discoverIE, which is accretive to both underlying earnings and margins, and strengthens our US footprint.

Magnasphere Corporation has a long-established track record of manufacturing and supplying high quality custom sensors across the US. Operating within our Variohm cluster of sensor businesses, Magnasphere will gain access to our wider base of customers and with it, new sales opportunities in our target markets. We are delighted to welcome the Magnasphere team into discoverIE Group.”