LONDON, UK: discoverIE Group announced the acquisition of 2J Antennas Group (2J), a Slovakian-based designer and manufacturer of antennas, for a cash consideration of €52.5m (£45.0m) on a debt free, cash free basis, before expenses, which will be funded from the Group’s existing debt facilities.
Founded in 2002, 2J Antennas is a leading designer and manufacturer of high performance antennas for industrial electronic connectivity applications that are closely aligned with the Group’s sustainability-linked target growth markets.
2J, which was owned by management who will continue with the business, is based in Bardejov, Slovakia with subsidiaries in the US and UK, selling into more than 50 countries and has a long track record of profitable growth at operating margins significantly higher than the Group average.
2J Antennas will become part of the Sensing & Connectivity division and form a new technology cluster with the Group’s existing antenna business, Antenova, creating a leading platform in the long-term growth, high performance, industrial wireless connectivity market.
With highly complementary products, both businesses will retain their distinct brand identities, under common expanded leadership, and will be integrated over time onto a common infrastructure.
This combination represents an attractive opportunity for the Group to accelerate growth in the market for wireless connectivity in industrial applications, an area set to grow strongly driven by application areas such as the Industrial Internet of Things (IIoT), robotics and artificial intelligence (AI) controlled industrial systems that require dependable wireless communication to function.
For the year ended 31 December 2022, 2J reported revenues of €18.1m (£15.5m), pre-tax profit of €4.4m (£3.8m), underlying operating profit of €3.7m (£3.2m) and a 21% underlying operating margin. Gross assets at 31 December 2022 were €8.1m (£6.9m).
Following a current year of normalising customer inventories, 2J is expected to continue its strong organic growth enhanced by access to discoverIE’s wider industrial customer base and international commercial support functions.
The integration with Antenova is expected to realise operational and revenue synergies over time, following an initial investment to support scalability, with the acquisition exceeding the Group’s stated returns target within four years.
The acquisition is expected to be immediately accretive to the Group’s underlying operating margin and accretive to underlying earnings in the first full year post completion. The Group’s proforma gearing2 as at 31 March 2023 increases from 1.0x to 1.6x with our long term target range being between 1.5 and 2.0x. The pipeline of acquisition opportunities in development remains strong.
Nick Jefferies, Group Chief Executive of discoverIE plc, said: “The acquisition of 2J 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 will be accretive to both underlying earnings and margins.
2J is a business that we have known for some time, with a strong product range and engineering capability that is highly complementary to our existing Antenova business. By bringing the two businesses together, they will gain access to a greater number of industrial connectivity target customers with a broader product range and wider commercial support functions. We have invested in additional management to scale up the business and achieve operating synergies.
The industrial wireless connectivity market is an exciting one with excellent growth prospects and the acquisition of 2J increases discoverIE’s opportunities in the faster growing markets of the Industrial Internet of Things (IIoT), robotics and artificial intelligence (AI) controlled industrial systems.
We are delighted to welcome the 2J team to the discoverIE Group.”
discoverIE Group acquired Magnasphere Corporation for $22 million
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