SDI Group Acquires Severn Thermal Solutions, Expanding into Controlled Environment Market
Why we think this is good
The acquisition of Severn Thermal Solutions is a positive move for SDI Group, as it provides the company with expansion into the controlled environment market, a new scientific niche with a growing customer base and strong international revenues. The acquired business is profitable, with healthy margins, and the acquisition is expected to be immediately earnings enhancing for SDI Group. While there are some minor risk factors around unquantified financials and lack of a clear integration timeline, the overall strategic fit and financial benefits of the deal outweigh these concerns.
Key Points
- Profitable business in the material testing and processing industry providing the Group with expansion into the controlled environment market
- Scientific niche in a growing market, blue-chip customer base and strong international revenues, delivering on the Group's stated acquisition strategy
- Severn will join the Group's Lab Equipment segment with intra-group cross-selling opportunities
- The acquisition is expected to be immediately earnings enhancing
Summary
SDI Group has acquired Severn Thermal Solutions, a designer and manufacturer of high temperature furnace systems and environmental chambers, for a net consideration of £4.75m. Severn is a profitable business in the material testing and processing industry, providing SDI Group with expansion into the controlled environment market. The acquisition is expected to be immediately earnings enhancing for SDI Group.