Technology firm Stadium Group has taken a further step forward in its aim to become a design-led electronics business after making a key £8m acquisition.
The Hartlepool-headquartered group, which employs around 1,000 people, provides niche electronic technologies and manufacturing services to the industrial, marine, aviation, transport infrastructure, lighting, medical, automotive, greentech and communication markets.
Now the group, which has manufacturing facilities in Eastleigh, Diss and China, is set to move further into the wireless device market after acquiring Cheshire-based United Wireless Ltd for £8m in cash and shares.
United, which employs 40 people, specialises in the design and manufacture of solutions that support wireless connectivity between devices across wireless networks, otherwise known as M2M (machine to machine) solutions.
Warrington-based United has a strong customer presence in the automotive and telematics sectors, and also works with manufacturers in the areas of ‘infotainment’ and vending, industrial equipment and asset tracking
Global demand for M2M wireless devices is forecast to grow by 24% over the next five years, with the number of cellular M2M device subscribers to rise to 490m within four years.
In an announcement on the London Stock Exchange the business said the acquisition is expected to be significantly earnings enhancing in the first full year of ownership, while also complementing the company’s existing technologies and providing potential growth opportunities.
Stadium will pay an initial consideration of £6m to acquire United, through £5m in cash and the balance of £1m by the issue of 1,515,152 Stadium shares on AIM on July 31.
The current owners and joint managing directors will stay with United and they have agreed to retain the Initial Consideration Shares for a minimum period of two years after completion.
If the acquired business beats certain targets Stadium will make an additional earn-out payment of up to £1.33m in Stadium shares and £0.66m in loan notes.
During the first months of its current financial year United delivered sales of £6m and EBIT (earnings before interest and tax of £900,000.
Charlie Peppiatt, chief executive officer of Stadium, said: “This acquisition establishes Stadium as a credible player in the fast growing market for M2M Wireless Devices.
“The successful integration of United will deliver the next step of our strategy to become a design-led electronics business by adding wireless connectivity to our integrated technology offering.
“I am confident that this acquisition will generate significant value for Stadium shareholders.
“As we stated in our pre-close trading update, trading in the first half of the year was in line with management expectations and significantly ahead of the same period last year and we remain confident about prospects for the year.”