Bodycote completes Lake City takeover, ends Stack deal, announces £60M share buyback programme
January 25, 2024
Bodycote plc, headquartered in Macclesfield, Cheshire, UK, has, completed its previously announced acquisition of Lake City Heat Treating (HT), Warsaw, Indiana, USA. The company also announced that it had ended the agreement to acquire Stack Metallurgical Group, based in Albany, Oregon, due to a failure to satisfy all closing conditions to the agreement.
Lake City HT is a prominent Hot Isostatic Pressing (HIP) and vacuum heat treatment business, primarily supplying the orthopaedic implant market as well as civil aerospace. The move is expected to significantly increase Bodycote’s customer reach in the medical market.
The consideration paid on closing for Lake City HT was $66.5 million on a cash and debt-free basis. After expected tax benefits worth approximately $7.5 million, the net price paid was $59 million. Lake City HT is forecasted to have achieved 2023 full-year revenues of around $14 million, with operating profit expected to be around $6 million. The business achieved 30% revenue growth in 2023 and is expected to continue to deliver good progress.
“Completion of the acquisition of Lake City HT is an exciting further step in our strategy to grow our Specialist Technologies businesses and footprint,” stated Stephen Harris, Group Chief Executive of Bodycote plc. “This acquisition is an excellent fit, enhances our profitability and earnings per share in addition to allowing us to capitalise on the appealing structural growth opportunities in medical and aerospace markets.”
£60 million share buyback programme
Bodycote also reported that, in light of the lower-than-anticipated acquisition spend, the group’s strong balance sheet and balanced approach to capital allocation, it has announced the intention to launch a share buyback programme of up to £60 million. The share buyback programme is expected to commence on March 18, 2024.
“The share buyback programme represents an attractive use of our capital,” Harris continued. “It highlights the strength of the group’s balance sheet, together with our commitment to a balanced and disciplined approach to capital allocation to drive growth and shareholder value.”
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