Published on: January 7, 2022

Acquisition and further Covid contract

SDI Group has announced the acquisition of Scientific Vacuum Systems Ltd (SVS), a UK manufacturer of physical vapour deposition equipment, for an estimated total consideration of £4.9m (including a £0.9m earnout, payable after 30 September 2022), net of £0.6m cash acquired. The initial cash consideration is £3.17m, with a further £1.4m cash payment due shortly after completion. The acquired business generated £2.5m in revenues and £0.7m EBIT for the year to 30 September 2021, with the earnout based on £1.1m EBIT. We estimate that the purchase price equates to a reasonable 5.0x EBIT multiple. The acquisition is expected to be immediately earnings enhancing. Management has also confirmed a further order for Atik Cameras, from a global OEM, for components used in PCR testing machines. We upgrade our forecasts accordingly, with a 3% uplift to our fully adjusted operating profit for FY22E and 23% for FY23E.

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