- Divestment of Omega for $525 million at 20.4x EBITDA
- £300 million share buyback programme
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Summary
19 April 2022 – Spectris plc (SXS: LSE) (‘Spectris’ or ‘the Group’ or ‘the Company’), the expert in providing insight through precision measurement, today announces the sale of Omega Engineering (‘Omega’) to Arcline Investment Management (‘Arcline’) for $525 million (£403 million), at a valuation of approximately 20.4x Omega’s 2021 adjusted EBITDA. Omega will be joining the Dwyer Group of companies (‘Dwyer’), an Arcline portfolio company. Alongside this, Spectris also announces a £300 million share buyback programme.
Omega is a provider of specialist sensors that help customers improve processes, delivered by a high service omni-channel distribution platform. Dwyer is a global leader in the design and manufacture of innovative sensors and instrumentation solutions for the indoor environmental quality, building automation, process and environmental markets. Dwyer views Omega’s high-quality measurement, monitoring and control solutions as a highly complementary product offering and sees benefits of a scaled platform within their shared markets.
For the 2021 financial year, Omega generated sales of £129.0 million, adjusted EBITDA of
£19.7 million, and as at 31 December 2021, the book value of Omega’s gross assets was £197.7 million. The consideration for the disposal will be settled in cash subject to customary adjustments for working capital, cash and debt and is subject to customary completion conditions and regulatory approvals, with completion expected to take place early in the third quarter of 2022.
Supporting Omega’s development and delivering value for Spectris
With new management and a revised strategy launched in 2020, Omega ended 2021 with a strong order book and well positioned for future growth; expecting to return to pre-COVID levels of revenue this year. We have been clear that scale is essential to deliver acceptable levels of profitability at Omega. As such, we believe that Omega’s next stage of development can be better fulfilled with the scale provided as part of a larger group.
At a valuation of 20.4x Omega’s 2021 adjusted EBITDA, significantly above the Group’s current trading multiple, this divestment offers a better opportunity to generate returns for shareholders and further enhance Group margins.
Since 2019, we have been working to transform Spectris into a higher-quality business, focusing on attractive growth markets. This sale increases the gross divestment proceeds over the past three years to over £1 billion, at attractive valuations, above the Group’s trading multiple. Following completion of the sale of Omega, Spectris will be made up of three core businesses: Malvern Panalytical; HBK; and Industrial Solutions, with a much-improved financial profile, focused on high precision measurement solutions.
Balance sheet strength provides opportunities to accelerate growth
The Group’s enhanced balance sheet strength leaves us well positioned to participate in further investment activity. The Group remains committed to driving sustainable organic growth, with significant investment in R&D, whilst continuing to evaluate value-enhancing M&A opportunities, from early-life technologies, through bolt-ons, to larger scale acquisitions, as well as collaborations with third parties. M&A remains a key strategic component and provides opportunities to compound growth and returns. We will remain disciplined in accordance with our stated capital allocation framework and financial criteria for acquisitions.
Share buyback programme
Based on our enhanced balance sheet, projections for the year ahead and the pipeline of acquisition opportunities, we are today announcing a share buyback programme of up to £300 million. This will constitute an initial tranche of £150 million to be launched shortly, and undertaken pursuant to the authority granted by the Company’s shareholders at the 2021 AGM, as well as a further tranche of £150 million to be launched, subject to approval of the Company’s shareholders at the 2022 AGM, held on 27 May 2022.
Andrew Heath, Chief Executive, said:
“In 2018, we set out to improve the quality of Spectris and simplify our business around a clear purpose of delivering value beyond measure to all our stakeholders. Spectris today is a more focused, more profitable, and more resilient business, underpinned by a very strong balance sheet. We are more aligned than ever to end markets with attractive growth trajectories, supported by key sustainability themes. The divestment of Omega will further improve our financial profile.
Today’s announcement is yet a further example of our approach to optimising our assets and successfully divesting businesses at multiples higher than the Group as a whole. This disposal, in conjunction with the share buyback programme, delivers clear value for shareholders, whilst also allowing us to take advantage of new growth opportunities for our core businesses, in line with our purpose.
I would like to thank all of our Omega employees for their contribution to Spectris over the years and wish them well in the next stage of their journey.”
For and on behalf of Spectris plc
LEI Number: 213800Z4CO2CZO3M3T10
Contacts:
Spectris plc
Siobhán Andrews
Head of Corporate Affairs
+44 20 4551 4549/+44 7920 230093
Jefferies
Tony White
David Genis
+44 20 7029 8000
Tulchan Communications
Martin Robinson
Giles Kernick
+44 20 7353 4200
About Spectris
Spectris’ global group of businesses are focused on delivering value beyond measure for all our stakeholders. We target global, attractive and sustainable markets, where growth and high returns are supported by long-term drivers. Precision is at the heart of what we do. We provide customers with expert insight through our advanced instruments and test equipment, augmented by the power of our software and services. This equips customers with the ability to reduce time to market, improve processes, quality and yield. In this way, Spectris know-how creates value for our wider society, as our customers design, develop, test and manufacture their products to make the world a cleaner, healthier and more productive place. Headquartered in London, United Kingdom, the Company employs approximately 7,600 people located in more than 30 countries. For more information, visit www.spectris.com.
About Dwyer Instruments
The Dwyer Group of companies consists of a series of companies and brands including Dwyer Instruments, Love Controls, Mercoid, WE Anderson, Proximity and UFM. Dwyer is a global leader in the design and manufacture of innovative sensors and instrumentation solutions for the indoor environmental quality, building automation, process and environmental markets. Founded in 1931, Dwyer Instruments is headquartered in Michigan City, Indiana, and has additional offices in Asia, Europe and Australia. Dwyer was acquired by Arcline Investment Management, a growth-oriented private equity firm, in 2021. To learn more about Dwyer Instruments, visit www.dwyer-inst.com.
About Arcline Investment Management
Arcline Investment Management is a growth-oriented private equity firm with $4.4 billion in cumulative capital commitments. Arcline seeks to invest in technology-driven, meaningful to the world industrial businesses that enable a better future. For more information visit www.arcline.com.
Disclaimer
Jefferies International Limited ("Jefferies") acted as sole financial advisor to Spectris in relation to the transaction. Jefferies, which is authorised and regulated by Financial Conduct Authority in the United Kingdom, is acting exclusively for Spectris and no-one else in connection with the matters set out in this announcement. Jefferies will not regard any other person as its clients in relation to the matters set out in this announcement and will not be responsible to anyone other than Spectris for providing the protections afforded to its clients, nor for providing advice in relation to the matters set out in this announcement, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
None of Jefferies nor any of its affiliates and/or any of its or their affiliates' directors, officers, employees, advisers and/or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to, the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) and/or any other information relating to Spectris and/or its associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available, or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.