Senior Engng Group - Acquisition
November 10 1998 - 2:31AM
UK Regulatory
RNS No 4469v
SENIOR ENGINEERING PLC
10th November 1998
Senior Makes Major US Aerospace Acquisition
"Senior Engineering Group plc ("Senior") is pleased to announce that it has
conditionally agreed to acquire the entire issued share capital of Jet
Products Corporation ("Jet") for a consideration of approximately #33.7
million (US$56.0 million). Jet manufactures precision engineered aerospace
components, particularly for gas turbine engines and engine nacelles,
including those used throughout the Boeing and Airbus ranges. The acquisition
will add a further high quality US business to Senior Flexonics' rapidly
growing aerospace portfolio."
The Acquisition
Approximately #2.4 million (US$4.0 million) of the consideration will be
settled in Senior shares and the balance of approximately #31.3 million
(US$52.0 million) paid in cash (as reduced by the amount of any assumed
borrowings). A further payment of up to #3.6 million (c. US$6.0 million) may
be made should Senior achieve an equivalent cash saving post closing in
respect of certain taxation benefits. The acquisition is conditional on the
receipt of a regulatory approval. Completion is expected to take place before
the end of November 1998.
The exact consideration is dependent upon the debt free net asset value at
closing, which is expected to be approximately #14.8 million (c. US$24.6
million). The acquisition will be financed from the Group's existing
borrowing facilities.
Ronald Blair, the current President and largest (c. 40%) shareholder of Jet,
will receive #2.4 million (US$4.0 million) in Senior shares as part of his
consideration. He will remain with Jet, as General Manager, as will the rest
of Jet's executive team, all of whom have extensive experience in the
aerospace and aerospace derivative industries.
Jet will operate as part of Senior Flexonics - North America Division.
The Business
Jet, founded in 1965, is located in San Diego, California and has
approximately 320 employees. Jet manufactures complex precision machined
components for the aerospace, space and land based turbine markets. Products
include precision engineered large rings, used for structural applications on
engine nacelle and tailpipe exhaust assemblies, and smaller flanges used as
ducting connectors, manufactured from materials such as aluminium, titanium,
cobalt, nickel and other high temperature alloys. Jet also produces components
in exotic metals for commercial space launch vehicles used for communication
satellites, as well as for military missiles, through its wholly owned
subsidiary TP Hearne Inc. An increasingly significant part of Jet's business
involves the manufacture of large attachment rings for hot sections of land
based turbines.
Jet supplies the major commercial airframe and aero-engine manufacturers,
together with their first tier suppliers, and in particular manufactures parts
for General Electric, Pratt & Whitney and Rolls-Royce engines used throughout
the Boeing and Airbus ranges.
One of Jet's principal competitive advantages is its ability to manufacture
difficult parts on short lead-times and at low cost. Jet carries out in-house
operations that several of its major competitors subcontract to third parties.
Jet's near net shape manufacturing technology leads to metal yields generally
in excess of those achieved by its competitors. Jet is widely acknowledged as
a leader in its chosen market and enjoys an excellent technical and commercial
reputation with its customers on both sides of the Atlantic.
In the year ended 30 September 1998, Jet's unaudited adjusted profit before
taxation rose to approximately #5.0 million (c. US$8.3 million) on sales of
approximately #27.2 million (c. US$45.2 million). The audited results for the
year ended 30 September 1997 comprised adjusted profit before taxation of
approximately #3.9 million (c. US$6.4 million) on sales of approximately #21.7
million (c.US$36.0 million), with adjusted debt free net assets of
approximately #12.1 million (c. US$20.1 million).
Rationale for the Acquisition
The acquisition of Jet will add a further high quality business to Senior
Flexonics' rapidly growing aerospace portfolio in the US and Europe. Senior
Flexonics' aerospace revenues have increased from less than #10 million in
1993 to almost #90 million in 1997. During this time, Senior Flexonics' has
made three key US acquisitions - Metal Bellows in 1994, Stainless Steel
Products in 1995 and Ketema in 1997.
Jet's product offering is complementary to that of Senior's existing US
aerospace businesses, in that it supplies hot engine components (like Ketema)
and structural components used in ducting (similar to Metal Bellows and
Stainless Steel Products). On completion of the acquisition, Senior will
be able to offer a broader range of products within these two applications.
Senior will leverage its aerospace marketing network in the US and Europe to
extend Jet's geographic reach and, in particular, Jet's exposure to Airbus (at
present approximately one quarter of Jet's revenues are ultimately Airbus
derived).
Senior Flexonics' European aerospace operations currently comprise Bosman
Powersource, a Netherlands-based aero-engine overhaul and component
manufacturer acquired earlier in 1998, and Ermeto-Hydexco, a French based
aerospace fluid transfer component manufacturer acquired in 1995.
Commenting on the acquisition of Jet, Andrew Parrish, Senior's Group Chief
Executive said: "The strategically important acquisition of Jet will
significantly strengthen Senior's aerospace portfolio in a directly parallel
yet differentiated product area. Jet is an attractive, high quality, growing
business in one of Senior Flexonics' key geographic and market areas and will
build on our successful acquisitions in the United States over the past six
years. It offers attractive sales development opportunities in Europe and
will add significantly to the Group's critical mass in the aerospace sector."
Glenn Timms, Senior's Director - Corporate Development, continued: "Senior
evaluates any potential acquisition with reference to a clearly defined set of
investment parameters, consistent with our stated corporate objective of
creating real increases in shareholding wealth through the generation of
economic returns in excess of our cost of capital. Jet scores highly against
these criteria and therefore enhances our ability to achieve this goal."
Andrew Parrish added: "The acquisition of Jet will enable Senior Flexonics' to
offer a focused yet comprehensive product range to what continues to be the
Group's fastest growing market sector. We are very pleased to welcome Jet's
management team to Senior and look forward to building internationally on the
success that they have already achieved."
For further information, please contact:
Senior Engineering Group plc 01923 775547
Andrew Parrish, Group Chief Executive
Glenn Timms, Director - Corporate
Development
Senior Flexonics Inc 001 630 372 3000
William L Kowal - Divisional Director,
Flexonics North America
Finsbury 0171 251 3801
James Murgatroyd
Notes to Editors
Senior Engineering Group plc is a specialised international engineering group.
It is organised into two principal divisions - Flexonics and Engineered
Products & Services. The Flexonics division, which provides more than 90% of
the Group's operating profit, is a world leading design and manufacturing
business specialising in thin-walled metallic flexible tubing and bellows,
servicing the automotive, aerospace (including space) and specialised
industrial markets. Jet represents Senior's largest acquisition, bringing the
1998 year to date total to nine transactions in seven countries, for an
aggregate investment of approximately #60 million.
END
ACQNFXFEFAEPFEN
Senior (LSE:SNR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Senior (LSE:SNR)
Historical Stock Chart
From Jul 2023 to Jul 2024
