Scott Technology agrees to buy Alvey Group to speed up expansion
By Tina Morrison
Feb. 21 (BusinessDesk) - Scott Technology has agreed to buy European industrial automation specialist Alvey Group for 12.1 million euro, speeding up its expansion drive and access to international markets.
Dunedin-based Scott has completed due diligence and is finalising the sale and purchase agreement with a target acquisition date of April 4, it said in a statement. The purchase would be funded through its cash reserves, which stood at $26.7 million as of August 2017, and is expected to have a positive impact on earnings from completion, it said.
Scott has been on the hunt for acquisitions, and last year bought Dunedin engineering firm DC Ross out of receivership to expand its facilities, having had an influx of new capital from the investment by cornerstone shareholder, Brazilian meat processor JBS. The maker of robotic and automation systems said Alvey is a specialist in palletising, conveying and warehouse automation and its products and markets are complementary to its own.
"Alvey brings with it a high-caliber workforce and expertise that will greatly add to our product range and software capabilities, while allowing Scott access to skills and technology faster than could be developed in-house," Scott chair Stuart McLauchlan and chief executive Chris Hopkins said in a statement. "This is a key development that adds to our overall automation capabilities, while helping fulfil our strategic expansion goal and accelerating our access to international markets."
Combining the two companies is estimated to lift Scott's annual revenue to $190 million, from $133 million, based on historic figures for both companies, Scott said. The purchase price represents a multiple of 4.5 times earnings before interest, tax, depreciation and amortisation for Alvey's March 2017 financial year.
Alvey is owned by its managing director Maarten Van Leeuwen and other senior executives who will remain with the company after the takeover.
Shares in Scott last traded at $3.22 and have gained 42 percent the past year.