Acquisition (2284F)
20 4월 2011 - 3:00PM
UK Regulatory
TIDMCHG
RNS Number : 2284F
Chemring Group PLC
20 April 2011
THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN OR INTO THE UNITED STATES, CANADA OR AUSTRALIA, JAPAN OR SOUTH
AFRICA OR ANY JURISDICTION IN WHICH SUCH PUBLICATION OR
DISTRIBUTION IS UNLAWFUL.
20 April 2011
Chemring Group PLC
Acquisition of Detection Systems Operations of General Dynamics
Armament and Technical Products for US$90.0 million
Introduction
Chemring Group PLC ("Chemring" or "the Group") announces that it
has conditionally agreed to acquire the Detection Systems
operations and certain related assets ("Detection Systems") of
General Dynamics Armament and Technical Products, a subsidiary of
General Dynamics Corporation, for a total cash consideration of
US$90.0 million (GBP55.2 million) ("the Acquisition"). In addition,
the Board has separately announced today a placing of new ordinary
shares in Chemring (the "Placing"), the proceeds of which will, in
part, be used to fund the cash consideration for the
Acquisition.
Acquisition overview
Detection Systems, based in Charlotte, North Carolina, is a US
leader in chemical and biological threat detection and has an
advanced capability in stand-off detection of Improvised Explosive
Devices ("IEDs").
Detection Systems is the incumbent supplier for two major US
military vehicle-mounted detection programmes: the Joint Biological
Point Detection System ("JBPDS") and the Joint Service Lightweight
Standoff Chemical Agent Detector ("JSLSCAD"). In addition,
Detection Systems' products include a stand-off IED and explosives
detector and the Juno(TM) hand-held chemical detector.
In the twelve months to 31 December 2010, Detection Systems
reported an unaudited profit before tax of US$8.3 million (GBP5.1
million) (2009: US$8.3 million (GBP5.1 million)) on turnover of
US$61.5 million (GBP37.7 million) (2009: US$69.8 million (GBP42.8
million)). The order book at 31 March 2011 was US$62.0 million
(GBP38.0 million), US$46.0 million (GBP28.2 million) of which is
expected to be delivered during 2011. The gross assets of Detection
Systems at 31 December 2010 were US$23.0 million (GBP14.1
million).
Opportunity and Rationale
The Acquisition creates substantial opportunities for Chemring
by enhancing its existing IED detection capabilities and through
growth within Detection Systems' chemical and biological detection
programmes.
Detection Systems' stand-off IED detection systems, developed in
partnership with a third party, provide a complementary
forward-look capability to NIITEK's HMDS ground penetrating radar
which, when used in combination, has the potential to transform the
speed of route-clearance operations in theatre. In addition,
Detection Systems is already under contract with its partner to
develop and deliver a number of stand-off explosives detection
systems. Finally, Chemring sees significant potential to distribute
Detection Systems' Juno (TM) hand-held chemical detector through
its international sales and distribution network.
Chemring sees significant further growth opportunities based
upon the production contracts in place in respect of Detection
Systems' core products. In August 2010, Detection Systems was
awarded a full rate production indefinite delivery, indefinite
quantity ("IDIQ") contract for the JBPDS potentially worth up to
$300 million (assuming options to extend are exercised), with the
potential for further upgrade work. With the JSLSCAD, Detection
Systems has a full rate production IDIQ contract, with the US
defence budget planning for a doubling in the procurement of the
Stryker Nuclear, Biological, and Chemical Reconnaissance Vehicle,
which incorporates the JSLSCAD as an element of its mission
equipment package.
The Acquisition is expected to be earnings accretive in the 12
months to 31 October 2012.
Principal terms of the Acquisition
The total consideration for the Acquisition is US$90.0 million
(GBP55.2 million), which will be paid in cash on completion. The
consideration is being funded by part of the proceeds of the
Placing. The Acquisition is conditional on, inter alia, certain US
regulatory approvals which are anticipated in around sixty
days.
Dr David Price, Chief Executive of Chemring, commented:
"This acquisition substantially enhances our counter-IED
business activities with leading-edge US technology for biological,
chemical and stand-off explosive detection. It will provide a
complementary capability to our existing subsidiaries, NIITEK and
Chemring EOD, and help us expand our growing global market."
Enquiries:
Chief Executive, Chemring
Group PLC
Dr David Price Finance Director, Chemring
Paul Rayner Group PLC 01489 881880
Keith Anderson
Christopher
Baird Investec 020 7597 5970
----------------------------- ----------------
Rupert Pittman Cardew Group 020 7930 0777
/ 07976 249289
----------------------------- ----------------
Notes
1. Reported as net of allocated central costs from General
Dynamics Corporation not being acquired as part of the
transaction
2. The statements in this announcement regarding the enhancement
of earnings per share do not constitute profit forecasts nor should
they be interpreted as meaning that the earnings per share of the
Company for the current or future years will necessarily match or
exceed the historical published earnings share of the Company
3. An exchange rate of GBP1:US$1.63 has been assumed in this
announcement
This information is provided by RNS
The company news service from the London Stock Exchange
END
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