TIDMDPLM
RNS Number : 1383F
Diploma PLC
11 July 2019
DIPLOMA PLC
12 CHARTERHOUSE SQUARE, LONDON EC1M 6AX
TELEPHONE: +44 (0)20 7549 5700
FACSIMILE: +44 (0)20 7549 5715
FOR IMMEDIATE RELEASE
11 July 2019
DIPLOMA PLC
ACQUISITION OF VIRGINIA SEALING PRODUCTS
FOR INITIAL CASH CONSIDERATION OF GBP56.0m (US$70m)
Diploma PLC, the international group supplying specialised
technical products, technical services and value-add services, is
pleased to announce the acquisition of the assets and trade of
Virginia Sealing Products, Inc. ("VSP").
VSP is a leading supplier of high-quality gaskets and fluid
sealing products, as well as customised solutions, to the
industrial MRO market. The business specialises in customers
processing and transporting hazardous and corrosive materials,
along with those in other industrial markets, including power
generation, pulp and paper and marine. VSP is built on strong,
long-standing customer and supplier relationships supported by
value-add servicing. The business is based in Virginia, with
operations throughout the southern United States.
Prior to acquisition, VSP was owned by Paul and David Malgee,
together with minority shareholdings held by key members of the
Executive management team. Following the acquisition, the Executive
management team will remain with the business in their current
roles.
In the year ended 31 December 2018, VSP reported audited
revenues of GBP35.7m (US$44.6m) and profit before tax of GBP5.8m
(US$7.3m). Gross assets at 31 December 2018 were GBP10.2m
(US$12.8m). After adjusting for finance costs and certain
non-recurring expenditure, adjusted operating profit for the year
ended 31 December 2018 was GBP6.4m (US$8.0m). The initial cash
consideration, before acquisition costs, is GBP56.0m (US$70.0m),
subject to minor working capital adjustments and represents a
multiple of ca. 9x adjusted historic operating profit. Further
deferred consideration of up to a maximum of GBP8.0m (US$10.0m) and
consistent with the initial transaction multiple, may be payable in
late 2020 subject to achievement of operating profit targets.
The acquisition will be funded through existing cash resources
and new debt facilities. Diploma PLC will continue to maintain a
strong balance sheet with Net Debt:EBITDA unlikely to exceed 0.5x,
following this transaction.
We expect this acquisition to be immediately earnings enhancing
for the Group and will be reported as part of the Seals Sector
activities.
Johnny Thomson, Chief Executive Officer of Diploma PLC said:
"We are delighted to welcome VSP into the Diploma Group. The
business has an excellent management team, a strong service
culture, and an impressive customer and supplier base. The
acquisition is consistent with our strategy and provides an
exciting opportunity to extend our Seals activities in North
America."
Tulchan Communications - +44 (0)20 7353 4200
Martin Robinson
David Allchurch
Diploma PLC - +44 (0)20 7549 5700
Johnny Thomson, Group Chief Executive
Officer
Nigel Lingwood, Group Finance Director
NOTE TO EDITORS:
Diploma PLC is an international group supplying specialised
technical products, technical services and
value-add services to the Life Sciences, Seals and Controls
industries.
Diploma's businesses are focussed on supplying essential
products and services which are funded by
the customers' operating rather than their capital budgets,
providing recurring income and stable revenue growth.
Our businesses then design their individual business models to
closely meet the requirements of their customers, offering a blend
of high-quality customer service, deep technical support and value
adding activities. By supplying essential solutions, not just
products, we build strong long term relationships with our
customers and suppliers, which support attractive and sustainable
margins.
Finally we encourage an entrepreneurial culture in our
businesses through our decentralised management structure. We want
our managers to feel that they have the freedom to run their own
businesses, while being able to draw on the support and resources
of a larger group. These essential values ensure that decisions are
made close to the customer and that the businesses are agile and
responsive to changes in the market and the competitive
environment.
The Group employs ca. 1,800 employees and its principal
operating businesses are located in the UK, Northern Europe, North
America and Australia.
Over the last ten years, the Group has grown adjusted earnings
per share at an average of ca. 13% p.a. through a combination of
organic growth and acquisitions. Diploma is a member of the FTSE
250 with a market capitalisation of ca. GBP1.6bn.
Further information on Diploma PLC can be found at
www.diplomaplc.com
LEI: 2138008OG17VYG8FGR19
Further information on Diploma PLC, together with a copy of this
Announcement, is available at www.diplomaplc.com
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END
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