CHG Chemring Group Plc

RNS Number:6462X
Chemring Group PLC
23 January 2001
 
 
               CHEMRING GROUP PLC ACQUIRES US DECOYS BUSINESS 
 
 
Chemring Group PLC ("Chemring") announces that it has signed a binding
agreement to acquire Alliant Kilgore Flares Company, LLC ("Kilgore"), a
subsidiary of Alliant Techsystems Inc.

Description of the business and reasons for the acquisition

 
Kilgore, based in Toone, Tennessee USA, is the largest supplier of
conventional infra-red decoys to the United States Department of Defense.
 
In the year to 31 March 2000 the unaudited sales of Kilgore were US$21.7
million and the unaudited operating profit before exceptional items was
US$0.1 million (operating loss after exceptional items was US$1.6 million).
At 31 March 2000, Kilgore had unaudited net assets of US$17.5 million.
Kilgore currently has a healthy order book of US$38 million.
 
The operating performance of Kilgore for the year to 31 March 2000 was
significantly lower than historical performance due to a voluntary suspension
of production operations in mid 1999 to improve facilities and methods. This
followed an incident arising during flare composition assembly. The necessary
investment is now complete and the facilities are fully operational.
 
Kilgore's products are complementary to the range of advanced decoy products
of Alloy Surfaces, Chemring's other US subsidiary. Kilgore is also developing
new products and has recently been awarded an infrared decoy development
contract for the US F22 aircraft. The US is an attractive market where there
is increasing emphasis on electronic warfare and the protection of valuable
military platform.
 
Additionally, the acquisition complements Chemring's existing UK business and
strengthens significantly its ability to compete in the expanding
international decoy market.
 
The acquisition is expected to be earnings enhancing in this financial year.
This statement should not be interpreted to mean that Chemring's future
earnings per share will necessarily be greater than the historic earnings per
share.

Principal terms of the acquisition

 
The consideration of US$23.0 million will be satisfied by the issue of
1,200,000 new Chemring ordinary shares and a balancing cash payment of
US$17.8 million. The cash payment will be made from new bank facilities. The
consideration will be subject to adjustment depending on the audited net
assets of Kilgore on completion of the acquisition. It is expected that the
acquisition will be completed in early February 2001.
 
 
 
Commenting on the acquisition, Ken Scobie, Chairman of Chemring, said: 
 
"Chemring Countermeasures is recognised as the world leader in the rapidly
expanding expendable countermeasures market, with its US subsidiary, Alloy
Surfaces, and its UK Countermeasures business. The acquisition of Kilgore
will significantly strengthen our presence both in the United States and
internationally in the air decoy market."
 
Today, Chemring also announced its preliminary results for the year ended 31
October 2000.
 
Hawkpoint Partners Limited advised Chemring on the acquisition.
 
 

Enquiries

Chemring Group PLC                         

David Evans, Chief Executive                     Tel: 01489 881 880
Paul Rayner, Finance Director

Cardew & Co

Jonathan Rooper                                  Tel: 020 7930 0777
 
 
Hawkpoint Partners Limited, which is authorised by The Securities and Futures
Authority Limited, is acting exclusively for Chemring in connection with the
acquisition and no one else, and will not be responsible to anyone other than
Chemring for giving the protections afforded to customers of Hawkpoint
Partners Limited or for giving advice in relation to the acquisition.  

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