XP Power Ltd (LON:XPP) has acquired Comdel, a US-based RF power supply company, for $23m/£17m. This marks the entry into a new market for XP and gives it the potential to expand the amount it sells to a sub-sector of its customer base. We have revised our forecasts to reflect both the acquisition and the strengthening pound versus the dollar. We increase our normalised EPS forecast by 1.2% in FY17 and 1.7% in FY18.
Deal funded by new debt facility
XP has acquired Comdel for $23m/£17m using a new $40m revolving credit facility. The deal is on a debt free/cash free basis with no deferred or contingent elements. The management team will remain with XP and the business will operate as part of XP’s newly created RF Power division. With revenues of $16.5m/£13.0m in FY16, this adds c 10% to XP’s revenues on a pro-forma basis.
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