Nanogate AG (DE:N7GG) has announced that it is to acquire the plastics division of Austrian company HTI High Tech industries (VIE:HTPV) for 275,000 new shares, (c €13m at today’s price). The transaction broadens the portfolio of services offered to customers, expands the customer base, reduces exposure to the automotive sector, and extends the international footprint. Depending on the timing of completion (in Q118), management expects the acquisition to raise group FY18 revenues by around 16% to above €220m and to enhance EBITDA, though it will be earnings dilutive short term.
Extending service offer, markets and footprint
As discussed in our May note, management has an exemplary track record of identifying and integrating acquisitions. This new acquisition brings an operating facility in Slovakia, which extends the group’s reach in Eastern Europe and provides a cost-effect production environment suitable for addressing relatively cost-sensitive markets such as consumer electronics. It also expands the customer offer to include solutions that require a combination of plastic and metal components and assembly. By adding capabilities directed at the electronics market, it reduces Nanogate’s exposure to the automotive industry.
Transaction gives revenue boost
Management notes that, depending on completion of the transaction, which it expects will take place in Q118, HTI will contribute over €30m revenues in FY18, bringing the group FY18 total to over €220m. While HTI will have a beneficial impact on group EBITDA, depreciation and financing costs mean that the transaction will have a negative short-term impact on net income. The consideration is being paid entirely in new shares (275,000), equivalent to c €13m. On issue, HTI will transfer these shares to one of its existing financing partners, an affiliate of QInvest LLC. QInvest intends to hold the shares for the long term and to provide the group with additional finance to support growth in future. We note that consensus forecasts at this point do not include this transaction.
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