TIDMSNR
RNS Number : 2402O
Senior PLC
09 June 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED FOR THE
PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO.
596/2014 WHICH FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM
PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR").
UPON PUBLICATION OF THIS ANNOUNCEMENT THIS INFORMATION IS NOW
CONSIDERED IN THE PUBLIC DOMAIN.
9 June 2022
Acquisition of Spencer Aerospace
Significant advancement in Senior's strategic focus on fluid
conveyance technology
Senior plc ("Senior" or "the Group") has signed a definitive
agreement to acquire substantially all of the assets of Spencer
Aerospace Manufacturing, LLC(1) ("Spencer Aerospace" or "the
Company"), a leading manufacturer of highly engineered,
high-pressure hydraulic fluid fittings for use in commercial and
military aerospace applications.
Spencer Aerospace is based in Valencia, California and
specialises in source-controlled, standard, and proprietary fluid
fittings, helping customers to find solutions for their fluid
conveyance challenges. Established customers include major North
American OEMs and Tier 1 suppliers, supplying key single aisle and
wide body platforms. Based on the product approvals already
undertaken and in progress, we expect the Company will be a strong
platform for growth. Spencer Aerospace was founded in 2013 by its
President Steven Spencer who has assembled an expert team with 300+
aggregate years of engineering and manufacturing experience. The
current management team will remain with the Company following
acquisition.
The fluid fittings products engineered and manufactured by
Spencer Aerospace are in high demand from aerospace and defence
customers around the world and are complementary to Senior's
existing advanced fluid conveyance product and system capabilities.
The strong customer relationships that Senior has with OEMs, Tier 1
integrators, and aftermarket customers around the world, will open
new opportunities for Spencer Aerospace. The combined capabilities
will provide greater access to developing market opportunities such
as hydrogen infrastructure and fluid handling. There are strong
synergies with Senior's existing fluid conveyance businesses, and
the combination of expertise will accelerate growth in aerospace
and adjacent markets.
Commenting on the acquisition, David Squires, Senior's Chief
Executive Officer, said:
"We are delighted to announce this acquisition and look forward
to welcoming Steven and his team to Senior. Under his leadership,
Spencer Aerospace has built impressive capabilities and an
expanding product portfolio that addresses growth opportunities in
our core markets. While we already have some fluid fitting
expertise within Senior, our customers have been strongly
encouraging us to increase our presence in this area and our
combined expertise and market reach will allow us to respond
decisively and rapidly grow associated revenues. This acquisition
further enhances Senior's industry-leading fluid conveyance
capabilities and is an important step in our strategy to optimise
our portfolio and maximise value for shareholders. Beyond the
immediate synergistic growth opportunities in our aerospace
markets, I am excited by the potential of opening up further
medium-term opportunities in adjacent markets served by our
Aerospace and Flexonics Divisions."
Steven Spencer, President of Spencer Aerospace, said:
"We are very pleased to be joining forces with Senior plc. We
have a shared vision about the critical role of fluid conveyance
and are sure there will be a strong cultural fit with the Senior
team. Our combined resources will enable us to accelerate our
product qualification activities and increase our speed to market
with source-controlled fittings. I feel certain that our existing
and new customers will benefit from this exciting
collaboration."
Senior has agreed to pay GBP48m(2) ($60m) for Spencer Aerospace,
comprising an initial consideration of GBP24m ($30m) in cash at
completion and a further GBP24m ($30m) 12 months after completion.
An additional GBP32m ($40m) is potentially payable in milestone
amounts, dependent on the financial performance of Spencer
Aerospace, during the period between completion of the acquisition
and 31 December 2026. Assuming the full consideration is payable,
the Group expects to benefit from future tax relief valued at
approximately GBP10m ($13m). The acquisition is expected to
generate a return on invested capital in excess of Senior's cost of
capital in the third full year following acquisition.
For the year ending 31 December 2022, the Company is expected to
generate revenue of at least $12m and earnings before interest,
tax, depreciation and amortisation of at least $1m. Given Spencer
Aerospace's healthy order pipeline and expected revenue
acceleration, the Company is expected to deliver strong profitable
growth over the coming years. The final earnout milestone would
become payable upon Spencer Aerospace's annual revenue reaching
$40m, representing revenue growth to more than 300% of expected
2022 revenue.
The transaction will be funded using the Group's existing
borrowing facilities and is expected to be accretive to adjusted
earnings per share(3) in the first full year of ownership.
The acquisition is expected to complete in Q3 2022, subject to
customary closing conditions.
A presentation for analysts and investors will be made available
on Senior's website at:
https://www.seniorplc.com/investors/presentations.aspx
Notes
For the year ended 31 December 2021, the Company generated
revenue of $5.9m and a trading loss before tax of $2.6m. This
reflected the impact of the pandemic where civil aircraft
production rates were reduced. Gross assets of the business at 31
December 2021 were $12m.
(1) Senior is buying substantially all of the assets of Spencer
Aerospace Manufacturing, LLC from Spencer Aerospace Manufacturing,
LLC, a subsidiary of Pivotal Manufacturing Group, LLC.
(2) All Pound Sterling equivalent amounts are calculated assuming
US Dollar to Pound Sterling exchange rate of $1.25:GBP1.
(3) Adjusted earnings per share, as defined in Senior's Annual
Report and Accounts 2021, is stated before amortisation
of intangible assets from acquisitions, restructuring
income/costs, corporate undertakings costs, net of associated
tax and before exceptional non-cash tax.
The person responsible for arranging the release of this
announcement on behalf of Senior is Andrew Bodenham, Group Company
Secretary.
Further information
Group Chief Executive, Senior +44 (0) 1923 714
David Squires plc 738
Group Finance Director, Senior +44 (0) 1923 714
Bindi Foyle plc 725
Director of Investor Relations, +44 (0) 1923 714
Gulshen Patel Senior plc 722
+44 (0) 7795 950
Alex Lusty Finsbury Glover Hering 497
About Senior
Senior is an international manufacturing group with operations
in 12 countries. It is listed on the main market of the London
Stock Exchange (symbol SNR). Senior designs and manufactures high
technology components and systems for the principal original
equipment producers in the worldwide aerospace & defence, land
vehicle and power & energy markets. Further information on
Senior plc may be found at: www.seniorplc.com
About Senior Aerospace
Senior Aerospace provides high technology products and systems
for demanding applications in aerospace & defence and adjacent
markets. Our product portfolio spans a wide range of fluid
conveyance and thermal management components and sub-systems, as
well as complex structural parts and assemblies, for fixed-wing and
rotary aircraft, aero-engines, spacecraft and a variety of other
industrial applications. With a global footprint, Senior Aerospace
manufactures proprietary designed and build-to-print products for
customers around the world that meet today's challenges and is
actively engaged in developing products and capabilities for a low
carbon sustainable future.
About Spencer Aerospace
Spencer Aerospace is an industry leader in high-precision
hydraulic fluid fittings for use in commercial and military
aerospace applications. The company specializes in source
controlled, standard and proprietary fittings and offers a range of
engineering, manufacturing, design and testing capabilities.
Cautionary Statement
This announcement contains certain forward-looking statements.
Such statements are made by the Directors in good faith, based on
the information available to them at the time of the announcement,
and they should be treated with caution due to the inherent
uncertainties underlying any such forward-looking information.
Purpose of this announcement
This announcement is made in accordance with the Group's
disclosure obligations pursuant to Chapter 10 of the UK Financial
Conduct Authority's Listing Rules. The acquisition constitutes a
class 2 transaction for the purposes of the Listing Rules and, as
such, does not require shareholder approval.
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END
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