Sign up
Mining Capital

VSA Capital Market Movers - Carr's Group Plc

VSA_Capital_Logo_Large.png
VSA-Logo-.jpg

Carr’s Acquires US Nuclear Engineering Firm

Carr’s Group (LON:CARR) the agricultural, food and engineering group, has announced the acquisition of ESI Holding Company, the holding company of US-based nuclear engineering firm NuVision Engineering.

• NuVision supplies engineering services and products to the commercial nuclear and power plant industries, government waste remediation facilities and waste clean-up sector

• Initial cash consideration of US$11.5m (£8.8m), with a total cash consideration of up to US$20m (£15.4m) payable, dependent on future financial performance

• Initial consideration financed through £6.0m of new and £2.8m of existing undrawn debt facilities with the balance paid through NuVision's future retained earnings

• NuVision had revenues of US$8.8m and an adjusted EBITDA of US$2.3m for the year to 31 March 2017. For comparison purposes, CARR’s group EBITDA in FY 2016 was cUS$22m with its engineering division contributing cUS$4.7m of this.

VSA Comment

CARR has long harboured ambitions to expand into the US nuclear engineering services market, a sector dominated by domestic businesses. This acquisition provides the company with the platform to do that. Current clients of NuVision include the US Department of Energy, major nuclear suppliers and public utilities in the country.

We see synergies with CARR’s German engineering business Wälischmiller, which will be able to supply its remote handling products into upcoming projects and an area that is currently trading ahead of expectations.

There are also opportunities for collaboration with CARR’s UK engineering business Bendalls, which has worked in the past with NuVision and is due to do so again on a recently signed major nuclear contract.

We would anticipate an initial year of consolidation, before significant collaborative benefits begin to be realised from year two onwards.  

This is a highly complementary acquisition of a high-tech engineering firm, providing the group with a platform to develop into the extremely important US nuclear sector, bringing specialised IP and innovative technology into the group to complement CARR’s existing remote handling and engineering operations.

At 8.7x EBITDA/2.3x Sales (assuming total consideration conditions are reached), the acquisition is more expensive than a traditional CARR’s acquisition. However, we believe the strategic rationale for the acquisition more than makes up for this. We would also note that more than 40% of the total consideration is based on future financial performance, which means the existing management team has considerable motivation to continue to deliver over the next few years.


© mining Capital 2017

Mining Capital, a subsidiary of Proactive Investors, acts as the vanguard for listed mining companies to interact with institutional and highly capitalised investors.
Headquartered in London, Mining Capital is led by a team of Europe's leading analysts and journalists, publishing daily content, covering all key movements in the Technology market.