ENGINEERING and pipework group Whessoe intends to spend NKr217.7m
(#21.8m) on a Norwegian acquisition and is asking shareholders for
#14.3m towards the cost of the deal, with the remainder coming from
internal cash resources.
The discounted one-for-four rights issue at 260p a share is not
conditional on the acquisition and has been underwritten by Schroders
merchant bank. Brokers to the issue are Hoare Govett Corporate Finance.
Whessoe is buying Autronica, a company primarily involved in the
design, manufacture and distribution of maritime and industrial
instrumentation and fire security systems. The acquisition fits neatly
into Whessoe's existing instrumentation and control division which was
enhanced last year by the acquisition, again facilitated by a rights
issue, of Varec, a US-based manufacturer of a range of tank level guages
and vapour control products.
Autronica has installed equipment on board more than 9000 ships. With
the upgrading of the world fleet, retrofit sales are an important
factor, accounting for 35% of the division's turnover in 1991. The
markets for its fire detection systems include offices and business
premises, cargo vessels and cruise liners and the Norwegian off-shore
oil sector.
Despite steadily increasing turnover profit performance has been
disappointing with the company blaming this on one-off exceptional
factors. In the year to end-December 1991, profits were #1.1m before tax
compared with #2.4m in 1990. This despite a 24% increase in turnover to
#44m. However, the acquisition is expected to provide a positive
contribution to the enlarged group in the first full accounting year
following the acquisition. Autronica's net assets at the end of 1991
were #13.8m.
Whessoe directors believe the acquisition will enhance the performance
of the company in a number of ways not least through providing new
outlets for products from some of its other subsidiaries such as Elcon
and Coggin. In addition, Whessoe intends to expand the sale of
Autronica's products in markets outside Scandinavia. The acquisition
will provide Whessoe with ready-made radar technology which it would
otherwise have had to develop itself in order to offer a broader product
range.
In terms of its current trading, Whessoe directors said the early
months of the new year had been satisfactory. In the year to
end-September, profit before tax rose 13.2% to #8.3m on turnover of
#79.7m, helped by the acquisition of Varec. The final dividend was
increased by 0.2p to 2.2p for a total of 8p compared with 7.2p in 1991.
An EGM is being held on February 24 to seek shareholder approval for
the acquisition. Whessoe currently holds call options over 56.8% of
Autronica's issued share capital.
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