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Element tables cash offer for Exova
Posted on Friday, 21 April 2017 08:54
Exova, the London-listed lab testing group, has accepted a GBP 620.30 million proposal from Element Materials Technology to take the company private in a deal that will enhance both groups’ presence in the aerospace, oil and gas and transport industries.

Under the terms of the approach, the Bridgepoint-owned buyer is offering 242.35 pence per share in cash, representing a slight premium to the target’s close of 238.90 pence on 18th April, the last trading day prior to the announcement.

Exova, which provides safety, quality and performance testing services, began exploring a sale in May last year as a media report by the Times suggested private equity firms, such as PAI Partners and Carlyle Group, were interested.

Last month statements were released that the group had received proposals from Element Materials, Jacobs Holding and PAI Partners, each of which had until 24th April to “put up or shut up”.

At the time of the announcement, shares spiked 13.3 per cent to GBP 2.48 on 27th March, giving the business a market capitalisation of around GBP 621.22 million.

Element Materials is the first company to submit a cash offer, which values Exova at about 16.0 times adjusted earnings before interest, taxes and amortisation (EBITA) and 12.5 times earnings before interest, taxes, depreciation and amortisation for the 12 months to 31st December 2016.

Together the two businesses will not only have an increased presence in certain laboratory-based testing industries, but also geographically.

Allister Langlands, chairman of Exova, noted: “This represents a good outcome for shareholders and the combination of Exova and Element creates a global leader in the testing market.”

The target has some 136 offices across 33 countries and was formed as the testing and inspection division of Bodycote, before being acquired by Clayton, Dubilier & Rice in 2008 for around GBP 417.00 million.

Exova was then taken public in 2014 in an initial public offering that raised GBP 237.00 million at the time.

The group generated revenue and EBITA of GBP 328.60 million and GBP 50.30 million, respectively, in FY 2016, compared to GBP 296.50 million and GBP 46.70 million in FY 2015.

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