RNS Number : 8157J

Volex PLC

26 August 2021

26 August 2021

Volex plc

("Volex" or the "Company")

Acquisition of Irvine Electronics, Inc. for $16.4 million

Expands geographic coverage and technical capability in key North American market

Volex plc (AIM:VLX), the global supplier of integrated manufacturing services and power products, is pleased to announce that it has signed a share purchase agreement for the acquisition of the entire issued share capital of Irvine Electronics, Inc. ("Irvine"), for a total consideration of $16.4 million (the "Acquisition"). The Acquisition will be satisfied in cash at completion from the Company's existing debt facilities and will be earnings enhancing from completion. The Acquisition is expected to complete in Q3 FY2022, subject to customary closing conditions including regulatory approvals in the US.

Strategic Rationale

-- Irvine is a US-based manufacturer of electronic solutions, including printed circuit board assemblies, with over 30 years of experience and deep relationships across a wide variety of blue-chip customers, particularly in the defence, military aerospace and medical markets

-- The Acquisition will strengthen Volex's existing profile in North America, adding further capabilities and capacity in California to complement the Group's existing operations in Washington state and Mexico, creating a compelling value proposition for customers in the region

-- Expanding on our integrated manufacturing services strategy, the Acquisition will further strengthen Volex's ability to provide customers with vertically integrated solutions through enhanced printed circuit board assembly capabilities

Transaction Highlights

   --    Earnings-enhancing from completion 
   --    Consideration represents 3.5x adjusted(1) EBITDA for the year ended 31 December 2020 
   --    Irvine delivering current annual run rate adjusted(1) EBITDA c.$3-4m 

-- Implementing the Volex continuous improvement methodology and deploying incremental investment in capabilities and infrastructure will be value enhancing

-- Grow Volex's capabilities and profile in the significant and attractive US defence market, providing opportunities to support long-term customer programmes

-- On completion of the transaction, the Company will still have financial flexibility to continue to progress opportunities in its exciting acquisition pipeline

Commenting on the Acquisition, Nat Rothschild, Executive Chairman of Volex said:

"The acquisition of Irvine increases our geographic coverage and technical capabilities in the key North American market. Our strategic intent is to develop Volex's presence in the defence and military aerospace markets, adding further blue-chip customers involved in long-term programmes and partnerships.

With advanced manufacturing located in Southern California, in the centre of one of the most dynamic electronics manufacturing environments in North America, Irvine will enhance our footprint, further complementing our total integrated manufacturing solutions strategy and strengthening our global capabilities in new and existing markets.

This acquisition is indicative of our ongoing M&A strategy which, along with our pursuit of operational excellence and organic growth, will assist Volex as we target $650 million in revenues and $65 million of underlying operating profit by 2024."

About Irvine

Irvine, a US based manufacturer of electronic solutions, was founded in 1990. The company has a very stable customer base which it supports on long-term projects. Most of these customers are in the defence sector with other significant customers in aerospace, medical and complex industrial technology sectors. It has a 50,000 square foot manufacturing site which provides ample capacity to grow and is accredited to stringent international quality standards. In the year ended 31 December 2020, Irvine generated revenues of $26.6 million, EBITDA of $8.4 million and profit before tax of $9.6 million. The net assets of Irvine as at 31 December 2020 were $4.3 million. The results of the year ended 31 December 2020 include a significant non-recurring customer project for Covid-19 related medical equipment which has now been substantially completed. Excluding the impact of this one-off project and other non-recurring Covid-related adjustments, the adjusted(1) EBITDA and adjusted(1) profit before tax for the year ended 31 December 2020 are $4.7 million and $4.6 million respectively.

1. Adjusted performance measures exclude certain projects, government support and one-off items that arose as a result of the Covid-19 pandemic and are not expected to be a feature of the performance of the business in future financial periods

This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of Volex plc is Christian Bedford, Group General Counsel & Company Secretary.

For further information please contact:

                                                 +44 (0)7971 156 
 Volex plc                                        431 
 Nat Rothschild, Executive Chairman 
 Jon Boaden, Chief Financial Officer 
 Christian Bedford, Group General Counsel and 
  Company Secretary 
 Singer Capital Markets - Nominated Adviser    +44 (0)20 7496 
  & Joint Broker                                3000 
 Shaun Dobson 
 George Tzimas 
                                 +44 (0)20 7991 
 HSBC Bank plc - Joint Broker     8888 
 Simon Alexander 
 Joe Weaving 
                                  +44 (0)20 7250 
 Powerscourt - Media Enquiries     1446 
 James White 
 Ollie Head 
 About Volex 
  Volex plc (AIM:VLX) is a global leader in integrated manufacturing 
  for performance-critical applications and a supplier of 
  power products. We serve a diverse range of markets and 
  customers, with particular expertise in cable assemblies, 
  higher-level assemblies, data centre power and connectivity, 
  electric vehicles and consumer electricals. We are headquartered 
  in the UK and operate from 17 manufacturing locations with 
  a global workforce of over 6,300 employees across 21 countries. 
  Our products are sold through our own locally based sales 
  teams and through authorised distributor partners to Original 
  Equipment Manufacturers ('OEMs') and Electronic Manufacturing 
  Services ('EMS') companies worldwide. 
  All of the products and services that we offer are integral 
  to the increasingly complex digital world in which we live, 
  providing power and connectivity from the most common household 
  items to the most complex medical equipment. For more information, 
  please visit www.volex.com 

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(END) Dow Jones Newswires

August 26, 2021 02:00 ET (06:00 GMT)

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